The effect of currency risk on crypto asset utilization in Türkiye

Nico Oefele, Dirk G. Baur and Lee Smales

Emerging Markets Review, 2025, vol. 65, issue C

Abstract: This study is the first to systematically examine the impact of currency risk on crypto asset utilization in an emerging market, using Turkish lira-denominated crypto trading volume as a proxy. Our findings highlight the dominance of a single exchange and the sustained growth of stablecoin trading. Daily trading volume is largely driven by global crypto market capitalization. However, we find no systematic link between trading volume and significant lira depreciations, inflation shocks, or policy rate changes. Contrary to policymakers' concerns about domestic currency substitution with crypto assets, our results suggest only weak, short-lived evidence related to currency risk in Türkiye.

Keywords: Crypto asset; Cryptoization; Currency substitution; Dollarization; Emerging market; Financial stability; Stablecoin (search for similar items in EconPapers)
JEL-codes: E42 E58 G23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:65:y:2025:i:c:s1566014125000135

DOI: 10.1016/j.ememar.2025.101264

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