What Role Do Cross-Border Regulations Play in Creating or Limiting Cryptocurrency Arbitrage Opportunities?
Cross-border regulations create arbitrage opportunities by causing price disparities for the same cryptocurrency in different countries. For instance, strict capital controls or differing tax laws can lead to a 'premium' in one market compared to another.
Conversely, regulations can limit arbitrage by imposing restrictions on moving funds between countries or by requiring stringent Know Your Customer (KYC) processes that slow down or prevent traders from accessing exchanges in certain jurisdictions. This friction prevents arbitrageurs from quickly correcting price differences.