Who Owns Crypto-Assets in the European Union? Trust Substitution, Digital Readiness and the Speculative Profile of Cyber-Financial Market Participants

Abstract

Crypto-assets have moved from a technological curiosity to a supervised component of European retail finance, and the European Union has responded to this transition with a dedicated legal framework built around consumer protection. The regulatory debate nevertheless rests on a thin evidence base on the demand side, as the characteristics of retail participants and the relationship between crypto-asset ownership and confidence in regulated advice have not been examined systematically at Union level. Single-country studies explain crypto-asset demand either as a speculative portfolio choice under high volatility or as a response to eroding confidence in traditional intermediaries, yet the distinction between these accounts remains untested using European data. This study establishes the individual-level determinants of crypto-asset ownership across the Union. The analysis draws on microdata from a large European survey representative of the adult population across the Member States, the first Union-wide source to combine crypto-asset ownership with cognitive, behavioural, digital, and institutional trust measures. Ownership is modelled using logistic regression with country fixed effects, and coefficient stability is examined through penalized likelihood estimation and shrinkage-based variable selection. Predicted probabilities are computed as sample averages across age, income, and trust strata. Ownership is relatively infrequent but markedly uneven across Member States, with higher prevalence in newer than in older Member States. Ownership is more likely among younger, male, and higher-income respondents, those comfortable with digital financial services, and those already holding a conventional investment product. Both objective and subjective financial knowledge raise the odds of ownership, with self-assessed knowledge showing the stronger association. The distinguishing result is that the likelihood of ownership increases progressively as distrust in regulated investment advice deepens, while respondents reporting no contact at all with advisory channels are the least likely owners in every age group. Trust substitution therefore operates among those who engage with advisory channels but lack confidence in them, rather than among those who remain outside such channels altogether.