Reimagining 'Money': The Political Economy of Cryptocurrencies

• In Event: Digital Trade, Money, and Cybersecurity

Abstract

Cryptocurrency markets have exploded globally. As of November 2021, market capitalization in
global crypto-assets had reached almost 3 trillion US dollars. Markets for cryptocurrency are not
limited to large financial firms and transnational banks: industry reports indicate that well over
200 million people have owned or used crypto during that same year. How do we understand and
explain the cross-national use of crypto-assets and the regulation of these markets? Drawing on a
wide array of political economy literatures, we argue that the use of cryptocurrencies corresponds
to both demand and supply factors. On the demand side, countries with broader financial markets
and where those markets have been stable have deeper cryptocurrency markets. When we
differentiate between stable and non-stable coins, we find that exposure to the global political
economy draws firms into cryptocurrency markets. On the supply side, consistent with the
political economy of monetary policy literature, we hypothesize that a government’s need to
manage the macro-economy influences its desire to regulate cryptocurrency markets.

Authors

• Ghita Chraibi, University of Virginia

• David Leblang, University of Virginia