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Cryptocurrencies and illicit practices: The role of governance

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  • Gonzálvez-Gallego, Nicolás
  • Pérez-Cárceles, María Concepción

Abstract

The paper aims to explore the role of national institutions in the adoption of cryptocurrencies. To achieve this, we apply PLS-SEM on a sample of 33 countries in order to test the potential causal effect of three governance constructs built on the basis of the World Bank’s Worldwide Governance Indicators. We find that the dimension that includes government efficiency and regulation quality acts as the main disincentive for citizens to use cryptocurrencies. Although the impact of the construct that comprises political stability and voice and accountability is negative too, its size is smaller. Those negative effects are partially offset by rule of law and control of corruption, since they encourage people to adopt cryptocurrencies. This reveals that a solid welfare state is the most effective factor in dissuading citizens from using those digital assets, while high-quality law enforcement and financial checks that usually apply to ordinary transactions encourage the adoption of cryptocurrencies.

Suggested Citation

  • Gonzálvez-Gallego, Nicolás & Pérez-Cárceles, María Concepción, 2021. "Cryptocurrencies and illicit practices: The role of governance," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 203-212.
    • Handle: RePEc:eee:ecanpo:v:72:y:2021:i:c:p:203-212
    DOI: 10.1016/j.eap.2021.08.003
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    References listed on IDEAS

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    Cited by:

    1. Eichacker, Nina, 2024. "Cryptocurrency in Heterodox Economic Theory and Institutional Practice," SocArXiv 7kyrm, Center for Open Science.
    2. Eichacker, Nina, 2024. "Cryptocurrency in Heterodox Economic Theory and Institutional Practice," SocArXiv 7kyrm_v1, Center for Open Science.

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