Economic Risk and Cryptocurrency: What Drives Global Digital Asset Adoption?

Vyacheslav Stupak ()
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Vyacheslav Stupak: Department of Economics, University College London, London WC1E 6BT, UK

JRFM, 2025, vol. 18, issue 8, 1-21

Abstract: Cryptocurrency is often viewed as a hedge against economic instability, yet the extent to which economic risk drives digital asset adoption remains unclear. This study asks to what extent does economic risk shape global cryptocurrency adoption? To address this question, the research investigates how variables such as inflation, corruption, unemployment, and exchange rate volatility influence adoption patterns. Using panel data from 41 countries between 2019 and 2024, the study employs country fixed-effects regression models and Principal Component Analysis. A novel Regulatory Permissiveness Index is introduced to evaluate the role of national regulatory environments. The findings show that cryptocurrency adoption is primarily associated with structural enablers such as GDP per capita, internet penetration, and regulatory clarity. Among the economic risk indicators, higher corruption and lower unemployment significantly predict adoption. Other economic factors, such as inflation and exchange rate volatility, are not consistently significant. The results suggest that economic development and digital infrastructure, rather than reactive responses to economic crises, are the main drivers of cryptocurrency adoption. Nonetheless, the significance of corruption highlights the role of institutional dissatisfaction in adoption behaviour, even in economically stable settings.

Keywords: cryptocurrency; economic risk; corruption; finance; regulation; adoption behaviour (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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