The impact of laws on cryptocurrency purchases

Ravi Arvindbhai Kalathiya

Diplomová práce

Abstract:

Abstract Summary This paper analyzes the impact of European Union (EU) regulation on cryptocurrencies, concentrating on the behavior of investors and overall market stability. By means of a mixed-methods approach — integrating quantitative data from financial databases and blockchain platforms with qualitative responses gathered through surveys, the research measures how effective the regulations are. The recommendations for enhancing regulatory frameworks reflect this more balanced perspective on the effects of such laws on innovation, transaction costs and consumer protection. 🔍 Research Background & Motivation Bitcoin, Ethereum and other cryptocurrencies have revolutionized the world financial systems through the adoption of decentralized peer to peer transactions. However, the meteoric rise of cryptocurrencies has created challenges for regulatory frameworks within industry, especially in the European Union (EU), where financial legislation must reconcile the demands of market innovation with those of investor protection and systemic stability. With growing regulatory activity in the EU—illustrated through regulation such as the 5th Anti-Money Laundering Directive (AMLD5) and Markets in Crypto-Assets (MiCA)—, the research is aimed at assessing its real effect on cryptocurrency purchases, investor behavior, and market conditions. 🎯 Objectives •Evaluate the influence of European Union regulations on the stability of the cryptocurrency market and the behavioral tendencies of investors. •Analyze the patterns of transactions and the activities associated with digital wallets prior to and after the enforcement of regulatory measures. •Collect insights from various stakeholders, including investors, regulators, and exchanges, regarding the implications of legislative frameworks on market engagement, innovation, and the costs associated with transactions. •Formulate practical recommendations for enhancing the regulatory framework governing cryptocurrency markets within the European Union. 🧪 Methodology A mixed-methods research design was used: 🔢 Quantitative Analysis •Data used range from blockchain explorers (Etherscan, Blockchain. com”), market platforms (Binance, Kraken, Coinbase) and database such as CoinMarketCap. Some key indicators analyses include: •Transaction volumes — Daily/Monthly •Prices of Bitcoin & Ethereum on the market •Number of active wallets •Transaction fees (Gas costs) •Market Cap and Volatility •These were then compared over time periods surrounding the adoption of prominent EU regulations (e.g., AMLD5 2020 & MiCA 2023). 🗣️ Qualitative Analysis •An online survey was conducted with 200 stakeholders: o Cryptocurrency investors (retail and institutional) o Exchange operators o Legal and financial regulators •Survey questions focused on: o Awareness and understanding of EU regulations o Perceived impacts on innovation, cost, and transparency o Expectations for future legal frameworks Thematic analysis was used to extract patterns and combine them with quantitative results for a well-rounded evaluation. 📊 Key Findings ✅ Positive Impacts of Regulation •Heightened investor confidence, particularly from institutions, on account of clearer legal definitions and fraud prevention. •Stabilized markets — Many markets saw both transaction volume and price volatility decline after regulation. •Better consumer protection: By enabling KYC/AML compliance, asset custody rules, and disclosures from MiCA. ⚠️ Challenges and Negative Impacts •Increasing compliance costs: smaller exchanges and startups are feeling a bigger burden. •Innovation bottlenecks: Too strict regulation pushes innovation to other (non-EU/EEA) territories. •Fragmentation across member states: Inconsistent laws still exist despite EU-level frameworks. 🌍 Comparative Analysis United States: Open to interpretation, closed to enforcem

Abstract:

ent; ruled by agencies such as the SEC. Japan: Good regulation that is innovation friendly with exchange licensing. China: Harsh prohibitions on cryptocurrency trading and mining. Malta: Pro-crypto but struggling with enforcement capacity. Key takeaway for the EU: Regulatory clarity and the ability to adapt are essential—MiCA is a big step forward, but we need to keep on evolving. 💶 Economic Implications •Positive: Regulation has led to the integration of crypto into traditional finance, helping EU remain competitive in fintech. •Risk: Excessive regulation or lagging enforcement could lead to capital flight, regulatory arbitrage, or stunted growth. 🧩 Conclusion EU regulations such as AMLD5 and MiCA have generally had a positive stabilizing effect on the crypto market but are not without drawbacks. The research shows that effective regulations must: •Be harmonized across all EU member states •Stay flexible to accommodate technological evolution •Support innovation while safeguarding investors 📌 Recommendations •Implement flexible regulatory sandboxes for emerging crypto projects. •Unify regulatory interpretation and enforcement across EU countries. •Enhance public education on regulatory compliance and consumer rights in crypto. •Monitor unintended consequences like reduced retail investor access or startup barriers.

Keywords

The European Union, Effects of regulations, Investor behavior and market stability, Policy recommendations, Cryptocurrency Regulatory frameworks

Jazyk práce: angličtina

Datum vytvoření / odevzdání či podání práce: 4. 4. 2025

Obhajoba závěrečné práce

• Vedoucí: Mgr. Michal Reichert, DiS.
• Oponent: Radka MacGregor Pelikánová, externi

Česká zemědělská univerzita v Praze

Provozně ekonomická fakulta

Magisterský studijní program:
International Trade and Business