The Deepening Allure of Crypto: Exploring Firm-Level Encounters with the Global Financial Architecture

Recent trends in institutional investment and firm behavior indicate deepening engagement with cryptocurrencies, reflecting shifts in the traditional banking system and persistent financial constraints in the Global South as well as North. This paper examines the allure of crypto assets for small- and medium-sized enterprises, highlighting their capacity to reduce dependence on bank-mediated finance, lower transaction costs, and facilitate cross-border payments. Our research question is: Does crypto adoption reduce financial constraints for firms? Using firm-level data from 27 countries (World Bank Enterprise Surveys 2022–24) and national cryptocurrency prevalence metrics, we find that higher crypto adoption correlates with lower financial constraints across short-term financing, long-term investment, and digital payment efficiency. Our findings challenge skeptical perspectives from institutions such as the Bank for International Settlements, showing that crypto usage is not purely speculative but embedded in pragmatic responses to regulatory and infrastructural limitations. These empirical results have implications for three literatures: financial access, banking regulation, and USD-dominated global finance, demonstrating that cryptocurrencies underpin monetary reintermediation, as financially constrained firms limit their use of the traditional banking sector. Our paper thus contributes to ongoing debates on the intersection of innovation, financial regulation, and global monetary governance, highlighting the nuanced ways in which crypto reshapes firm-level financial practices without supplanting traditional banking systems.