UK Takes the Helm in Europe's Crypto Mass Adoption
The CNWE region, comprising Central, Northern, and Western Europe, holds the second-largest share of global cryptocurrency transactions, trailing only behind North America with the USA at its core.
According to a recent Chainalysis report, the countries in the CNWE region accounted for 17.6% of the global cryptocurrency operations, amassing $1 trillion between July 2022 and June 2023.
The USA remains the cornerstone of the global crypto industry Source: Сhainalysis
Among the six European nations where crypto adoption is notably swift, the United Kingdom stands out as the clear frontrunner.
Jamie McNaught, the founder and CEO of UK-based crypto exchange Solidi, shared insights with Chainalysis experts, expressing that the English regard cryptocurrency as both a promising innovation and an essential component of their investment strategies.
“Customers in the U.K. typically seek alternatives to poor savings and investment returns. While NFTs are no longer in favor, customers continue to look for overperforming, long-term returns in Bitcoin — particularly with the anticipated 2024 halving — and Ethereum, while also making sizable bets on XRP, Cardano, and Solana,” he explained.
It's crucial to highlight that in June 2023, the UK enacted the Financial Services and Markets Act. This legislation integrated the definition of crypto assets into the existing financial legal framework and provided the government with additional authority to regulate stablecoins. To date, these new regulatory measures have not had a detrimental impact on the market. Nevertheless, Chainalysis observed a slight decrease in stablecoin transaction activity post-adoption of the law, with investors subsequently concentrating more on Bitcoin and ETH.
Crypto Adoption is Soaring in Six EU Countries Source: Сhainalysis
This summer brought a wealth of updates regarding government regulation in the crypto sector. The European Union has ratified the Markets in Crypto-Assets Regulation (MiCA), slated for implementation by the close of 2024. This leaves just over a year for the full standardization of cryptocurrency activity regulations across all EU member states.
In France, the Autorité des Marchés Financiers (AMF), the national financial markets authority, swiftly endorsed the MiCA initiatives, promptly formulating supplementary technical standards for the domestic crypto industry. Seeking insights, Chainalysis researchers reached out to Lorie Veillere, Lead Compliance at Paris-based cryptocurrency market maker and financial services platform Flowdesk. Veillere opines that the regulatory shifts at both the European and national levels have been pivotal in catalyzing crypto adoption along the Seine. Paris is currently enjoying a veritable crypto renaissance. Société Générale, a major financial conglomerate, has secured the first cryptocurrency license in the country. Crypto market giants such as Binance, Crypto.com, and Circle have set up their European headquarters in Paris. Furthermore, local authorities are aiming to attract American crypto enterprises, weary from the regulatory turmoil in the U.S. crypto market.
Germany stands as Europe's second-largest crypto economy. Dr. Sven Hildebrandt, Executive Director of Business Development and Strategic Partnerships at Boerse Stuttgart Digital, was consulted for his perspective. He underscores, “Germany has a very strong historical routing in technical blockchain development. Germany has the second most full nodes for Bitcoin after the U.S.”
German authorities have slightly preceded their European parliamentary peers in adopting local cryptocurrency legislation during the past spring. This pertains to the Future Financing Act, also known as ZuFinG. Broadly, the regulators have outlined norms intended to safeguard the rights of crypto investors. The regulatory changes have encouraged Munich Re, a global leader in the insurance market, to forge a partnership with Boerse Stuttgart Digital Exchange (BSDEX), the first centralized crypto exchange in Germany. Interestingly, BSDEX operates as a crypto subsidiary of the Stuttgart Stock Exchange, established back in 1860. By 2024, Munich Re plans to provide 100% insurance coverage for BSDEX’s staking programs. Additionally, Chainalysis mentions a collaborative project between Deutsche Bank, Germany's foremost creditor, and Taurus, a Swiss startup, revolving around custodial services and tokenization.
Chainalysis does not exclude the potential for significant growth in Italy’s crypto economy on this new legislative playing field. The experts highlight Milan, long recognized as Italy’s financial center. In 2023, with the support of the country's central financial institution, Banca d'Italia, the FinTech Milano Hub was founded. The hub's mission is to develop and implement digital projects for both private and public enterprises.
In their conclusion, the analysts share words from Dr. Hildebrandt, who contends that the legislative regulation of the crypto market in Europe is a move in the right direction. However, he notes that the positive impacts of regulatory policies are just beginning to be felt.
Overall, MiCA paves the way for broad acceptance of cryptocurrencies and digital assets,the expert concludes.
We previously reported how it would be prudent for Ukraine to consider the unique characteristics of its national economy and crypto market, and to implement the provisions of MiCA in a manner tailored to its own requirements.
