Just recently, Europe made headlines by ranking as the region with the highest number of crypto startups in the world. Almost 4000 crypto and Web 3 startups have their headquarters in this region. This is quite surprising, especially after several studies have named the region as the second-largest crypto market globally. Europe accounted for about 17.6% of the international transaction volume just between July 2022 and June 2023.
Of course, the fascinating benefits of digital currencies are the major reasons for this growing interest. For instance, Ethereum offers a decentralized framework that can cater to today’s needs for privacy and transparency. In Europe, such needs have become apparent, and in this article, you will discover how these and many other factors are fueling the spread of crypto.
Welcoming the blockchain infrastructure
About six years ago, the EU established the European Blockchain Services Infrastructure (EBSI) to aid in developing blockchain-based services for the public. The region seems to have made tremendous progress, with about 40 nodes now developed. Recently, the European Commission confirmed plans to make these services official by launching the European Digital Infrastructure Consortium (EDIC), simplifying cost-sharing and network management.
Nine member states, including Cyprus, Romania, Belgium, and others, were to constitute the consortium. As part of the initial stages of the project, the EU focuses on verifiable credentials like personal documents, legal entities and so on. Verifying education credentials across the whole continent has been challenging ever since the EU was formed in the 1980s. Given the benefits of these EBSI applications, Europe may see such challenges come to an end.
As you might know, blockchain applications go beyond just monetary transactions. If you want to reduce counterfeit goods across your global supply chain, this immutable public ledger can be a great way to get started. Beyond that, organizations like Alpha Dapp have now made it possible to record educational credentials on the chain.
There is more. Just recently, Europe mentioned blockchain as one of the main focus areas in the Digital Decade initiative. The continent has also been pursuing a digital euro and a digital identity wallet, whose aim is to optimize eGovernment services for EU citizens.
The role of regulations
One of the things that raises eyebrows in the crypto industry is the possibility of misusing digital currencies for money laundering. You can imagine what this means for Europe, especially now that a Springer survey reveals that illicit crypto transactions accounted for about $20.1 billion in 2022.
It is no wonder that the European Parliament approved the Markets in Crypto-Assets Regulation to help curb such instances. The rules, which were scheduled to come into force in 2024, are expected to protect consumers against fraud deception. Agreeing to this, Stefan Berger, the lead MEP for the MiCA regulation, said that this move would help rebuild trust in the industry, especially after FTX collapsed.
He added that the regulation would help monitor underlying crypto risks and provide consumers with all necessary information. And did you know that this move will give the European crypto industry more regulatory clarity than other major economies like the US?
The MiCA requires exchanges to have licenses from the national regulators and prove that they are stable and can protect user funds. Other requirements include adhering to prudential standards, implementing controls to avoid proprietary trading, etc. You can also expect to find a public register for non-compliant companies to be sure you are participating on a reputable platform.
Influences from other regions
The recent crypto clampdowns have really contributed to the growth of the European cryptocurrency market. In China, for instance, crypto mining was banned in 2022, which might have encouraged investors to turn to the European region, where regulations were not as tight.
In the US, things seem to be quite tough for the industry despite the recent approval of ETFs. There have been instances where the SEC has brought charges for some services like crypto staking, causing them to cease. Such moves have caused several CEOs to consider moving their headquarters to countries like the UK. This presents a great opportunity for the European market.
In fact, US Senator Cynthia acknowledged that the US failure to come up with suitable policies is pushing the industry to other regions, including Europe. And true to it, some crypto organizations have already moved. This is without mentioning the efforts by some countries that may lead to the further spread of crypto. In the UK, for instance, the Bank of England has confirmed plans to adopt a Central Bank Digital Currency in the future.
Final thoughts
Although the recent moves of both individual states and Europe as a whole may welcome mixed reactions, it is clear that they will likely encourage the advancement of the crypto industry. That will make it possible for consumers to enjoy highly sought-after benefits like decentralization, which are beneficial for industries like iGaming. And since most of these developments are just in infancy, who knows? Maybe, beyond 2024, Europe might become the next frontier for digital currencies.
