Western Europe Is Now the Largest User of DeFi And Crypto
China banning all crypto transactions should have been big news in the DEFI and crypto market. However, cryptos seem to have taken it in stride. After an initial fall, Ether recovered quickly, and Bitcoin is up past $57k for the first time in months.
So why hasn’t China banning crypto trading not had more of a dramatic effect on crypto prices?
For starters, Chinese officials have made no secret of their desire to thwart cryptocurrency transactions and have previously taken steps to crack down on crypto trading. To a certain extent, an anticipated ban on trading in China could have already been priced into crypto assets.
But perhaps even more surprising, China isn’t even the largest market for crypto trading; Western Europe is.
According to recent data from blockchain analysis firm Chainalysis, over that last year, more than a trillion dollars in cryptocurrency made its way into Central, Northern, and Western Europe (CNWE), with the U.K., France, Germany, and the Netherlands leading the pack. That’s 25% of global crypto activity over that period.
Large institutional transactions made up the bulk of that growth. Between July 2020 and 2021, crypto transactions in parts of the CNWE swelled from $1.4 billion to over $46 billion, with the majority of those transfers going to DeFi crypto platforms.
Crypto transaction volumes were also up in East Asia, where China typically dominates crypto trading, however, growth has slowed from 31% in July 2020 to 14% a year later. Overall, the data shows DeFi crypto transaction volumes climbed the most in Western Europe, surging 25% year-over-year, followed by North America in second with an increase of 21% over the same period.
Why Is DEFI So Prevalent in Europe?
Not everyone was surprised to hear Western Europe was dominating DeFi crypto transactions. Matthew Nemer, co-founder and CEO of the U.S.-based crypto startup Linus, briefly worked in Berlin and told Yahoo Finance that “…European investors have been at least a year ahead of American investors when it comes to participating in DeFi.”
What makes DeFi so attractive in that part of the world? According to Nemer, a robust crypto scene and open banking laws.
In January 2020, Nemer and his Linus co-founder presented their crypto app at the Paris Fintech forum. There, they were awarded the top prize for Best Innovation by a panel of judges made up primarily of EU-based venture capitalists focused on investing in fintech companies. Back in the U.S., it was almost a year before they saw the same level of venture capital interest, putting U.S. venture firms in a position where they are playing catchup to their E.U. counterparts, says Nemer.
And it’s not only that European investment in crypto took off while U.S. firms fell behind; open banking regulation is also at least partially responsible for surging E.U. DeFi crypto volumes. Laws aimed at curbing crypto may not be enough to kill crypto trading outright; just look at China, where despite best efforts, the crypto market is still thriving. However, open banking regulation certainly creates an environment more conducive to growth.
The most significant difference between banks in the E.U. and most of the rest of the world is a piece of legislation passed in 2018. The update, PSD2, requires banks to share customer banking information – upon client request – with authorized third-party providers (TTP) through application program interfaces (APIs).
The result has been increased freedom and more choice for customers, who can now initiate banking transactions through fintech and crypto apps as easily as they would through traditional banking institutions – minus the middleman.
What Does That Mean for DeFi Technologies?
DeFi Technologies (NEO: DEFI) (GR: RMJ.F) (OTC: DEFTF) has been at the forefront of making participation in digital assets more accessible to investors by bridging the gap between traditional capital markets and decentralized finance. And this includes bringing innovative exchange-traded products to the equities market.
Their wholly-owned subsidiary Valour has launched several crypto ETPs that have allowed investors to gain exposure to crypto assets in a simple, safe, and secure way. And now, to meet with growing European demand, the company recently announced their ETPs would begin trading on the Frankfurt Stock Exchange.
Bitcoin Zero and Ethereum Zero began trading on October 1, 2021 and will be followed shortly after by Valour Cardano ETP, Polkadot ETP and Solana ETP.
The Frankfurt Stock Exchange is the 12th largest globally by market cap and the largest of the seven regional exchanges in Germany. Inclusion on this securities exchange opens Valour’s ETPs up to a much larger audience. It could dramatically impact the company’s growth, which has already seen assets under management surge 1,400% in eight short months.
“Listing in Germany is a major event for DeFi and all of its shareholders,” commented Russell Starr, Executive Chairman of DeFi Technologies, via press release. “We anticipate substantial growth in our assets under management (“AUM”) as our products gain recognition globally. The Valour team has done an exceptional job creating these cutting-edge products.”
Disclaimer: The company described in this article is a customer of NAI Interactive Ltd. This material is for informational purposes only and is not intended as a recommendation or offer or solicitation for the purchase or sale of any securities or financial instruments, or for transactions involving any financial instrument or trading strategy.