Effects of Regulations on Digital Asset Prices: Evidence From the Counter-Strike Game Series

Counter-Strike: Global Offensive and Counter-Strike 2 are first-person-shooter video games in which players can own cosmetics for their weapons, known as “skins”. These skins can be traded, bought, or sold through various means. This study seeks to examine the effects of a regulation implemented by developers of the game which banned the sale and trade of a common tax-free medium of exchange (case keys) for these skins and seeks to classify them as either a utility-based collectible or purely a digital commodity like cryptocurrencies. Using a novel and expansive panel data set gathered from the Steam Market and econometric models I find that the regulation disproportionately increased the prices of rarer skins. Additionally, results suggest that hedonic models have significant predictive power, challenging prior research. These findings may provide insight into other digital assets or collectible markets, including challenging the law of one price in collectible markets.