How Does the Lack of Centralized Regulation Affect the EMH in the Crypto Space?
A lack of centralized regulation allows for greater market manipulation, insider trading, and less transparency, all of which hinder market efficiency. Without strict rules and enforcement, the Strong and Semi-Strong forms of EMH are easily violated.
This results in more pronounced and sustained arbitrage opportunities. Regulation, such as mandatory disclosure, is generally seen as a driver of market efficiency.
Glossar
EMH
Efficiency ⎊ : The theory posits that asset prices instantaneously reflect all available public and private information, precluding consistent alpha generation through analysis of historical data or public disclosures.
Centralized Regulation
Framework ⎊ Centralized regulation, within the context of cryptocurrency, options trading, and financial derivatives, represents a shift from decentralized, self-regulatory models toward oversight by governmental or quasi-governmental bodies.