Financial literacy and cryptocurrency adoption: cross-country evidence from Europe

Abstract

The rapid expansion of cryptocurrencies has increased interest in understanding the factors that drive participation in these emerging financial markets. Among the determinants examined in the literature, the role of financial literacy remains controversial, with previous studies reporting positive, negative, and insignificant relationships. This paper investigates the association between financial literacy and cryptocurrency adoption using data from the OECD/INFE International Survey on Adult Financial Literacy 2023. Financial literacy is measured through an index based on three core concepts: inflation, compound interest, and risk diversification. The models control for demographic and socioeconomic characteristics, previous investment experience, attitudes toward financial risk, trust in the financial system, and country fixed effects. The results consistently show that higher levels of financial literacy are positively associated with cryptocurrency ownership. Previous investment experience, male gender, higher income, and younger age also significantly increase the likelihood of cryptocurrency participation, whereas tertiary education has no independent effect once financial literacy is considered. The findings suggest that financial literacy facilitates participation in financial innovation by reducing informational barriers rather than encouraging speculative behavior. The study contributes new cross-country evidence to the literature and highlights the importance of financial education in an increasingly digital financial environment.