Research articles for the 2020-08-08

Protecting Energy Privacy Across the Public/Private Divide
Kugler, Matthew B.,Hurley, Meredith
Energy-usage monitoring can expose much of what takes place inside people’s homes and offices. As the “smart home” revolution continues, this data will only become more revealing. Though this information is essential for the development of the smart electric grid, it is also useful to a variety of others: law enforcement, energy-efficiency experts, and marketers. At present, this data enjoys little Fourth Amendment or statutory protection. This was not previously a problem because the information was historically not overly sensitive. Now that utilities are collecting more than two thousand times as much information about households as they were before, however, more protection is needed. This Article traces the rise of “smart meter” technology, evaluates the Fourth Amendment implications of law enforcement access to smart meter records, and proposes a statutory framework to govern public and private access to such data. It also reflects on the growing challenge of protecting digital privacy in an era where once undetectable information is now readily and involuntarily shared with third parties and on the Fourth Amendment implications of failing to restrict private use of sensitive data.

The Impact of Derivatives on Cash Markets: Evidence From the Introduction of Bitcoin Futures Contracts
Augustin, Patrick,Rubtsov, Alexey,Shin, Donghwa
We exploit a unique feature of cryptocurrency markets to provide new evidence on how derivatives impact cash markets. In December 2017, the CME Group and CBOE Global Markets both introduced futures contracts on bitcoin (BTC) against USD, but not on any other cryptocurrency exchange rate pairs. Because identical cryptocurrencies trade on multiple exchanges, we can examine how the introduction of bitcoin futures changed various attributes of BTC-USD relative to other cryptocurrency pairs, keeping exchange characteristics constant. Following the futures introduction, we find a significant increase in cross-exchange BTC-USD price synchronicity relative to other exchange rate pairs, as demonstrated by an increase in price correlations and a reduction in arbitrage opportunities. We also find evidence in support of an increase in market efficiency and market quality. There is suggestive evidence of increasing market liquidity, although these results are weaker. Overall, our analysis supports the view that the introduction of BTC-USD futures was beneficial to the bitcoin cash market by making the underlying prices more informative.