A multi-country analysis of policy uncertainty and Blockchain Innovation

Despite the growing interest in Blockchain Innovation (BI), there is a lack of research on its predictors. This study draws on the policy uncertainty literature to hypothesize the positive influence of economic policy uncertainty (EPU) and cryptocurrency policy uncertainty (UCRY Policy) on country-level BI, determined by the total number of blockchain patents in a country. We tested our hypotheses using a two-level sample of 126 quarterly observations nested in five countries: Australia, China, Japan, Korea, and the United States. The results confirm our expectation that the EPU and UCRY Policy lead to an enhanced BI. Moreover, we found that the UCRY Policy is more impactful on BI than EPU, and that when examining the two policy uncertainty indicators simultaneously, the effect of EPU on BI becomes insignificant. This study has important implications for policymakers and investors.