Legitimacy Types, Platform Reputation, and Public Engagement:A Mediated Analysis of Cryptocurrency Markets

Abstract

This paper discusses the aspects of the normative, the regulative, and the cognitive aspects of legitimacy and their role in influencing the population to participate in the cryptocurrency market in Pakistan as well as the moderating effect of the reputation of crypto platforms. The article aims to define the perceptions of the legitimacy of users with respect to their readiness to adopt and use electronic financial devices in a semi-regulated, dynamic market. It had a quantitative research design with the use of a sample of 199 Pakistani respondents in the data collection process. The statistical analysis was done in SPSS. The research has used reliability assessment, correlation and regression as well as mediation analysis via Hayes PROCESS Model 4. The findings indicate that normative and cognitive legitimacy have high positive influence on the involvement of the population; whereas regulative legitimacy does not have any significant influence. Such results demonstrate that social acceptance and cognitive understanding are the direct factors that influence people to engage in cryptocurrency operations instead of legal institutions. Moreover, when the mediation analysis is conducted, the reputation of the crypto platform is a mediator between the relationship between the legitimacy and the involvement of the population. This highlights the level of trustworthiness, transparency in platforms, and credibility in encouraging participation towards the user when the state regulation is still emerging. The end of the paper states that legitimacy is the requisite underlying factor in relation with engaging with the platform, and that platform reputation is a system that has the capacity of converting the appreciation of legitimacy into actual behavioral reactions. The observations made can be added to the theory of institutional and legitimacy theory because they demonstrate that some gaps within the regulatory framework of developing economies like Pakistan can be covered using the trust-based institutions.