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Why don't you read through the paper?

Here is the short answer:

> We adopt the definition of regulated exchanges from the state of New York, which has one of the earliest regulatory frameworks in the world. [6]

> 6 Regulated exchanges are issued BitLicenses and are regulated by the New York State Department of Financial Services. Bitlicence carries some of the most stringent requirements. Our main results are robust to alternative classifications of regulated exchanges. As of June 2020, NYDFS has issued licenses to 25 regulated entities, six of which provide crypto exchange service. They are Itbit, Coinbase, Bitstamp, Bitflyer, Gemini, and Bakkt (futures and options only). Further information can be found at: https://www.dfs.ny.gov/apps_and_licensing/virtual_currency_b.... (Last accessed: July 3, 2020)




Lest anyone think that the solution is more regulation, it's worth looking at the impact of the BitLicense. This overbearing regulatory framework has stifled innovation and forced crypto startups to leave the world’s leading financial hub and build their companies elsewhere. Compliance costs millions of dollars, leaving most startups with no viable option except to block their users from accessing their services in NY. No one wins. In their misguided attempt to protect their citizens, they inadvertently blocked New Yorkers from participating in the best performing asset class of the decade.


What makes you think it was inadvertent?




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