Kryptonite for cryptocurrencies? What are the effects of regulatory controls on Bitcoin returns and volatility?

Mullings, R ORCID: https://orcid.org/0000-0002-5569-9117, 2025. Kryptonite for cryptocurrencies? What are the effects of regulatory controls on Bitcoin returns and volatility? International Journal of Finance and Economics. ISSN 1076-9307

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Abstract

This paper examines the impact of regulatory controls on Bitcoin's excess returns and volatility. The paper innovates by proxying changes in the regulatory environment using global Google search volume intensity data. The generated regulatory indices accurately identify episodes of regulatory tightening within cryptocurrency markets. A three-factor model—incorporating market, momentum, and size factors—is employed to evaluate the effects of regulation on Bitcoin returns. The study also assesses the influence of changes in the regulatory environment on volatility using additional controls. Findings reveal that increased regulation significantly reduces monthly Bitcoin returns and increases return volatility. These effects are both statistically and economically significant, robust across multiple proxies for regulatory activity, and persist even when accounting for the effects of the COVID-19 pandemic. The results highlight the real regulatory risks associated with Bitcoin investments, particularly for risk-averse investors, and underscore the importance of policy developments in shaping cryptocurrency market dynamics.

Item Type:	Journal article
Publication Title:	International Journal of Finance and Economics
Creators:	Mullings, R.
Publisher:	Wiley
Date:	26 December 2025
ISSN:	1076-9307
Identifiers:	Number Type 10.1002/ijfe.70126 DOI 2557537 Other
Rights:	This is the peer reviewed version of the following article: Mullings, R. (2025). Kryptonite for cryptocurrencies? What are the effects of regulatory controls on Bitcoin returns and volatility? International Journal of Finance and Economics, which has been published in final form at https://doi.org/10.1002/ijfe.70126 This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
Divisions:	Schools > Nottingham Business School
Record created by:	Laura Borcherds
Date Added:	04 Mar 2026 10:58
Last Modified:	04 Mar 2026 10:58
URI:	https://irep.ntu.ac.uk/id/eprint/55359

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