How does cross-listing affect the pricing and trading of digital tokens?

I find significant increases in price and trading activity around the date of a token’s first cross-listing. Tokens observe a 49% raw cumulative return in the two weeks around the cross-listing date. Token trading volume is almost 50 times higher after cross-listing. The price increase is not related to cross-listing to larger volume marketplaces, but to marketplaces that serve different user/investors and have stricter listing and user identification requirements. Most importantly, this finding goes again the common idea of investors taking advantage of the crypto “Wild West”. I find investors prefer and reward tokens listed in more regulated marketplaces.

About the Author:

Hugo Benedetti is a Ph.D. candidate in Finance at Boston College. His current research agenda focuses on the asset pricing implications of crypto-marketplaces’ practices, and how these could set a precedent for legacy financial instruments as they evolve and implement blockchain-enabled technologies. His research has been featured in The Economist, Bloomberg, The Wall Street Journal and Nasdaq, as well as in several crypto-industry publications.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.