Promoting stability in the Wild West of cryptocurrency

For the average person, cryptocurrencies raise more questions than answers. Fortunately, TMU financial mathematics professor Alexey Rubtsov is on the case to investigate the usefulness of financial tools put in place to add a layer of stability to these new currencies. One of his latest studies published in top journal Management Science examines the value of a new tool introduced in 2017 called Bitcoin futures contracts. 

Rubtsov describes the cryptocurrency market currently as a sort of “Wild West” where you can buy crypto for different prices on different platforms. Bitcoin futures contracts are designed to synchronize prices across platforms, allowing people to buy or sell currency at a future date for a predetermined price, even if the price declines. Examining the results produced by the new futures tool, Rubtsov’s findings show such financial interventions can help stabilize prices in digital markets. 

For Rubtsov, who is also head of TMU’s Financial Mathematics Research Group and undergraduate program director for financial mathematics, it’s not the technology that interests him as much as the idea of cryptocurrencies as an asset, and what risks they present. “The bigger question is how to create financial tools, especially emerging ones, that are stable and easily used by individuals and organizations in the economy,” he says. 

This research is especially important for regulators, who Rubtsov says are behind in a market moving so quickly. “We want to help regulators understand this asset better, how different it is and how risky it is,” he explains. “I'm studying this topic because the outcomes of my research can help them make well-informed decisions.”

Rubtsov’s wide-ranging research interests include AI and climate change, as well as cryptocurrency.