Cryptocurrency Adoption as a Financial Coping Mechanism During Sovereign Currency Crises: Evidence from Lebanon, 2019–2023
0 viewsAbstract
Lebanon's economic collapse since 2019 — marked by a currency devaluation of over 90 percent, triple-digit inflation, and informal capital controls that froze household access to bank savings — has coincided with a marked rise in cryptocurrency use among Lebanese residents. This paper examines whether cryptocurrency adoption in Lebanon functioned as a financial coping mechanism during this crisis, and situates the case within the broader academic debate over whether digital assets serve as a reliable hedge against currency instability. Drawing on secondary data from financial press, industry research, and academic theses published between 2019 and 2024, the study compiles a comparative timeline juxtaposing macroeconomic crisis indicators against proxies for crypto adoption, including wallet-download growth and reported P2P trading activity, and triangulates this macro-level timing evidence against two independent, peer-reviewed structural-equation-modeling surveys of Lebanese crypto users (Dabbous et al., 2022, n = 255; Yamout et al., 2025, n = 400). The findings show a clear temporal association between the deepening of Lebanon's banking crisis and the growth of local crypto activity, consistent with adoption patterns observed in other high-inflation emerging markets, while the two survey studies independently confirm that usability and social-trust factors, not hedging beliefs, are what actually predict individual adoption intention. The wider academic literature on Bitcoin specifically as an inflation hedge remains divided, with several event-study and time-series analyses finding no consistent statistical relationship between Bitcoin returns and inflation shocks. The paper concludes that in Lebanon's case, cryptocurrency use was driven less by inflation-hedging in the classical sense and more by capital-control evasion and remittance facilitation, a conclusion supported by both the macro-timing evidence and independent survey data, with implications for how policymakers in fragile economies should regulate digital assets.
Keywords
Bitcoin, Capital Controls, Cryptocurrency Adoption, Financial Coping Mechanism, Inflation Hedge, Lebanon Financial Crisis, Peer-To-Peer Trading, Remittance, Sovereign Currency Crisis