Alternative digital finance and its uses and abuses: an empirical study of challenges to traditional banking

What are the implications of the growing use of cryptocurrencies, and the finance they ease access to, for globalised firms, institutions and regulation? We show why and how cryptocurrencies are an increasingly attractive alternative to finance from traditional banks and financial institutions, both for credit and payments. We use quantitative analysis to evidence the link between growing cryptocurrency transactions and declining use of traditional sources of finance from the regulated banking system. This shift is underpinned by the tensions between financial regulation, geopolitics, and alternative finance. Our paper augments three areas of scholarship relating to the political economy of cryptofinance. One, the emancipatory potential of cryptocurrencies which allows us to make the argument that traditional banking has limitations for many businesses and that these can be at least partially overcome through cryptofinance. Two, debates about banking regulation demonstrate how the rules and requirements of global institutions make alternatives like crypto attractive. And three, the challenges that accompany United States dollar hegemony, and the growing weaponisation of the global reserve currency, draw attention to the challenges and benefits of cryptofinance.