| Summary: | On-chain crypto-assets transaction volumes have grown rapidly, particularly during the COVID-19 pandemic. Crypto-assets activity appears to be a global phenomenon, although it still remains modest relative to gross domestic product for most countries. Panel regressions across more than 130 countries show that the variation in countries' monthly crypto volumes is mostly driven by globally relevant factors such as real U.S. longer-term inflation expectations, U.S. real Treasury yields, and gold and crypto-asset prices, rather than recent country-level macroeconomic developments. Cross-sectional regressions offer tentative evidence that crypto activity is higher in countries with higher information and communications technology adoption and higher reliance on remittances. Taken together, the findings shed new light on the drivers behind crypto activity and offer support to the notions that crypto-assets are perceived as a risk asset, a potential macro hedge, and a potential tool to support cross-border transactions. However, the results come with caveats: a significant portion of the sample period includes extraordinarily loose global financial conditions; the crypto volume data have a short history, rely on important limiting assumptions, and do not represent all crypto activity; and crypto-assets represent a fast-evolving, increasingly diverse asset class and industry
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