Looking for a safe haven against American stocks during COVID-19 pandemic

This article aims to find the best safe-haven for stock investors in the American market since the COVID-19 pandemic outbreak. The research period covers March 2020–May 2022. Among the possible alternatives, we analyse the traditional ones: US bonds, gold, and silver, as well as the new ones: stable DeFi and CeFi coins, and most popular cryptocurrencies: Bitcoin and Ether. We study quantile coherency between S&P 500 and each asset and the respective conditional correlation. We show that the safe-haven properties of the assets varied over time and that centralized stablecoins could have been used as safe-haven against American stocks during the pandemics.

An Examination of Whether Gold-backed Islamic Cryptocurrencies are Safe Havens for International Islamic Equity Markets

This study investigated the safe-haven role of two gold-backed Islamic cryptocurrencies, i.e., OneGram Coin (OGC) and X8X Token (X8X), for 15 Islamic equity indices at the global, regional, and country levels. For this purpose, we used four-moment modified value at risk, dynamic conditional correlation-based hedge and safe-haven hypotheses, directional spillover in quantiles, and daily data from February 17, 2019, to May 5, 2021, including the post-pandemic period from February 1, 2020, to May 5, 2021. Based on the findings, OGC was a strong safe-haven for several Islamic equity markets, especially during the COVID-19 pandemic. We also constructed two novel polarity and subjectivity measures using natural language processing, which indicated that when negativity in the market (e.g., polarity, subjectivity, and economic/market uncertainty) is higher on social media platforms, OGC produces positive returns in order to reduce the losses in equity indices. These results hold after controlling for trading volume.

Information transmission among energy markets, cryptocurrencies, and stablecoins under pandemic conditions

This paper investigates the directional causal relationship and information transmission among the returns of West Texas Intermediate (WTI), Brent, major cryptocurrencies, and stablecoins by drawing on daily data from July 2019 to July 2020. Applying effective transfer entropy, a non-parametric statistic, the results show that the direction of the causal relationship and the nature of information spillovers changed after the COVID-19 pandemic. More precisely, our findings reveal that WTI and Brent are leading the prices of Bitcoin and Bitcoin Cash. Conversely, Bitcoin futures and stablecoins (TrueUSD and USD Coin) are leading WTI and Brent prices. In addition, the stablecoin Tether became a leader against Brent prices after the pandemic, although it is still following WTI prices. Moreover, Ethereum and USD coin preserved their position as leaders against Brent prices. Interestingly, our results also reveal that Ethereum, Litecoin, and Ripple preserved their position as leaders of WTI prices. The change in the nature of directional causality and the spillover effect after the COVID-19 crisis provide valuable information for practitioners, investors, and policymakers on how the ongoing pandemic influences the connection and network correlation among the energy, cryptocurrency, and stablecoin markets. © 2022 Elsevier Inc.

REGULATING GLOBAL STABLECOINS AND CENTRAL BANK DIGITAL CURRENCIES IN SELECTED G20 COUNTRIES1,2

Digitalization of the global economy, which has intensified during the COVID-19 pandemic, is leading to the development of digital currencies. Financial authorities in most countries are working to design regulation aimed at minimizing the risks associated with privately issued digital assets. At the same time, research is being carried out, and several pilot projects have been launched, on the use of central bank digital currencies (CBDCs)—a new payment instrument that can potentially contribute to stimulating innovations, expanding access to financial services, simplifying cross-border payments, and maintaining financial stability. In this article, the author examines the approaches of some G20 members to regulating CBDCs and global stablecoins (GSC)—a financial instrument pegged to real assets, which is a potential alternative to traditional fiat currencies. The author then identifies general tendencies in the approaches of the considered jurisdictions to regulation and proposes recommendations on intensifying the development of Russia’s national rules and norms in this area, primarily for GSC, and strengthening international cooperation. © 2021. All Rights Reserved.

REGULATING GLOBAL STABLECOINS AND CENTRAL BANK DIGITAL CURRENCIES IN SELECTED G20 COUNTRIES

Digitalization of the global economy, which has intensified during the COVID-19 pandemic, is leading to the development of digital currencies. Financial authorities in most countries are working to design regulation aimed at minimizing the risks associated with privately issued digital assets. At the same time, research is being carried out, and several pilot projects have been launched, on the use of central bank digital currencies (CBDCs) a new payment instrument that can potentially contribute to stimulating innovations, expanding access to financial services, simplifying cross-border payments, and maintaining financial stability. In this article, the author examines the approaches of some G20 members to regulating CBDCs and global stablecoins (GSC)-a financial instrument pegged to real assets, which is a potential alternative to traditional fiat currencies. The author then identifies general tendencies in the approaches of the considered jurisdictions to regulation and proposes recommendations on intensifying the development of Russia's national rules and norms in this area, primarily for GSC, and strengthening international cooperation.

Spillovers between the Islamic gold-backed cryptocurrencies and equity markets during the COVID-19: A sectorial analysis

This study examines the return and volatility transmission between the Islamic gold-backed cryptocurrencies (Onegram and X8X) and global Islamic equity sectors during the pre-COVID and COVID-19 periods. We also estimate the optimal weights, hedge ratios, and hedging effectiveness for all pairs of markets. Our results suggest that the COVID-19 crisis intensified the spillover effect between the selected Islamic assets. We show that investors could increase their allocations in Onegram gold-backed cryptocurrency to reduce the risk of the equity sector portfolio during the COVID-19 pandemic. Moreover, the hedging costs for all pairs have increased during the COVID-19 period in comparison to the pre-pandemic level. Finally, the analysis of hedging effectiveness suggests that investors can reduce the risk of Islamic sectorial equity portfolios by adding the Islamic sharia-based cryptocurrencies during both sample periods.

"Shiny" crypto assets: A systemic look at gold-backed cryptocurrencies during the COVID-19 pandemic.

In this paper, we empirically analyse the performance of five gold-backed stablecoins during the COVID-19 pandemic and compare them to gold, Bitcoin and Tether. In the digital assets' ecosystem, gold-backed cryptocurrencies have the potential to address regulatory and policy concerns by decreasing volatility of cryptocurrency prices and facilitating broader cryptocurrency adoption. We find that during the COVID-19 pandemic, gold-backed cryptocurrencies were susceptible to volatility transmitted from gold markets. Our results indicate that for the selected gold-backed cryptocurrencies, their volatility, and as a consequence, risks associated with volatility, remained comparable to the Bitcoin. In addition, gold-backed cryptocurrencies did not show safe-haven potential comparable to their underlying precious metal, gold.