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An Overview of Europe’s Cryptocurrency Market

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Last updated April 3, 2020

As one of the world’s wealthiest regions, Europe is a market any company from any industry would like to enter. But is it suitable for the cryptocurrency industry? 

Even more, is there a market for cryptocurrency in Europe?

Let’s find out!

1. European Policies on Crypto Assets and the Crypto Industry

european crypto policies and regulations

The European cryptocurrency market is somewhat of a Wild West. The European Union and European Central Bank used the AMLD5 (Fifth Anti-Money Laundering Directive) to fight money laundering, terrorist financing, and tax evasion via cryptocurrencies.

For starters, AMLD5 includes a definition for cryptocurrencies, which goes as follows:

“A virtual currency is a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency, and does not possess a legal status of currency or money, but is accepted by natural or legal persons, as a means of exchange, and which can be transferred, stored and traded electronically”.

Increasingly more regulators are trying to fight back against the illicit use of cryptocurrencies. And for good reason. It is estimated that the global market value for the misuse of cryptocurrencies exceeds 7 billion EUR.

Secondly, AMLD5 subjects crypto exchange services and custodian wallet providers to customer due diligence requirements, requiring them to report suspicious transactions to financial intelligence units. Authorities can then use that information to fight tax evasion.

But these regulations still have blind spots. Crypto exchanges that do not provide an integrated wallet are currently not subject to these requirements. Trading platforms, hardware/software providers, and miners are also omitted from the regulations.

Some may consider that the EU is doing a sloppy job of their policies, but I beg to differ. Ursula von der Leyen, president of the European Commission, stated that it is crucial that Europe capitalizes on the potential of the digital age to strengthen its industry and innovation, within safe and ethical boundaries.

This shows that the EU sees the potential of blockchain technology and cryptocurrencies. And while regulations need to be set in place to increase security and decrease illicit usage, those regulations need to be drafted carefully.

However, while the EU may be working to put up a regulatory framework for digital assets, it isn’t successful in doing it clearly. Its vague definitions for cryptocurrencies leave local governments with a lot of wiggle room to apply their own political agenda. While this can result in crypto safe havens such as Malta, it can also lead to member states with stricter views on cryptocurrencies.

As a response to the somewhat-vague regulations imposed by the EU, seven European countries started an initiative called the “Mediterranean Seven”. The initiative is led by Malta and France and was joined by Italy, Spain, Portugal, Greece, and Cyprus. Their primary goal is to promote the use of blockchain technology and support its development.

While so far not many regulations have been put into place in the countries that form the Mediterranean Seven, they have been increasingly vocal about increasing regulation and legislation in the coming years.

Despite everything, solid cryptocurrency legislation throughout Europe still seems far away. Making online payments in cryptocurrency is possible, but scarce. And the transition to in-store transactions might take a few years, especially with the focus being currently switched to more important matters.

2. How Brexit Impacts the European Crypto Market

impact of brexit on cryptocurrencies

Although Brexit concerns most of the business sector, the crypto companies that have operations going on in the United Kingdom are not that affected by it.

As Cointelegraph surveyed several specialists from different crypto firms, we can observe that the general view on Brexit is that it will have imperceptible effects on their activity

Nathan Catania, a partner at global digital asset policy and regulatory adviser XReg Consulting, does not see Brexit as an immediate concern. That is because most crypto-related activities are either unregulated or only regulated for AML purposes.

Stepan Uherik, the chief financial officer of SatoshiLabs, shares a similar view and anticipates that there will be only a minor impact of Brexit beyond short-term market volatility. His view is especially based on the fact that Bitcoin and the crypto companies have already proved long-term resistance to local crises. 

Furthermore, Elsa Madrolle, the international general manager for blockchain solutions provider CoolBitX, estimates that the United Kingdom will continue being the favored destination for expanding United States-based digital asset companies. Although political uncertainty is unappealing to a business looking to establish a foreign base, the UK is still the most familiar and attractive location for US firms.

3. The Opinion of EU Citizens on Crypto Assets

opinion of eu citizens on crypto assets

What do people think of crypto assets

According to a Bitflyer’s survey, Europeans expect cryptocurrencies to still be around ten years from now but expect Bitcoin to wear off in the next decade. From 10,000 surveyed residents 63% were positive that cryptocurrencies will last, and 49% expect BTC to fall in the next 10 years.

Andy Brant, the COO of Bitflyer Europe, emphasizes that digital assets have become more established, explaining that the phenomenon revealed by the poll results indicate that people started looking past the initial cryptocurrency hype.

How involved are European citizens in crypto activities?

It is generally considered that blockchain is popular in Europe. There are more Bitcoin nodes in Europe than in any other region of the world.

According to Atomico’s report from 2017, almost half of the funding raised by ICOs came from Europe. Even more, 40% of all ICOs were based in EU-member countries.

Blockchain technology adoption in Europe is a growing trend that goes beyond its uses for cryptocurrencies. So, many of the companies that completed ICOs to gather funds were focused on blockchain applications that included concepts like IoT and AI.

Furthermore, the migration to blockchain in financial and insurance activities could add a gross value of billions of USD from countries like:

  • Switzerland – 66.68bn USD;
  • Denmark – 16.47 bn USD;
  • Czech Republic – 8.37 bn USD.

4. Leading Crypto Companies in Europe

top european crypto exchanges

Top Crypto Exchange Platforms in Europe

Europe is the region with most cryptocurrency exchange platforms from which many allow fiat transactions, also offering SEPA transfer as a payment method. The volume of SEPA transactions on cryptocurrency exchanges has established the Euro as the second most used fiat currency in the crypto world, after the US dollar.

Some of the biggest exchanges in Europe are:

  • Binance
  • LiteBIT 
  • P2PB2B
  • Bitstamp

Top Crypto Wallet Providers in Europe

European wallet providers make up 42% of the total number of wallet providers in the cryptocurrency market. However, the majority of wallet users don’t come from Europe but from Asia-Pacific and Middle-East.

Here are some of the prominent wallet providers based in Europe:

  • Bitwala
  • Blockchain.info
  • Luno
  • Xapo

Popular Crypto wallets

The popularity of crypto wallets in Europe doesn’t differ too much from the global popularity level, with the following being the top choice of users:

Ledger Nano X

  • Private keys are protected within a secure chip, designed to withstand highly sophisticated attacks.
  • Supports 23 coins & ERC-20 tokens which can be managed from a smartphone or computer with Ledger Live.
  • Rewards earning options for holding coins on the device using Ledger Live or an external wallet.
  • Ledger Nano X can store up to 100 applications at the same time, including Bitcoin, Ethereum, XRP, Bitcoin Cash, EOS, Stellar and many more.

Trezor T

  • Supports over 1000 Coins & Tokens.
  • Full control over funds without involving any third party.
  • Open source and completely transparent. The software’s code can be checked for hidden elements by any developer.
  • The wallet is loaded from a secure specialized environment provided by the device, offering very strong protection against computer vulnerabilities and malware.
  • Offers a Bitcoin-only firmware option.
  • U2F authentication.
  • Encryption via GPG.
  • SSH.
  • Backed by millions of users and can be connected with your computer through USB.
  • The device can be backed up by a 24-letter recovery seed, which is generated by a random number generator algorithm built-in to the device.

Electrum

  • Easy to use with an automatic interface.
  • It is open-source software, and anyone can contribute to further development. 
  • High level of privacy with no data stored online 
  • It only supports Bitcoin.

Coinbase

  • Offers an easy-to-use interface and supports digital financial instruments along with popular cryptocurrencies. 
  • Can store multiple signatures and uses two-factor authentication 
  • Has numerous investors and is backed by multiple reputable exchanges. 
  • Considered to be the safest cryptocurrency wallet. 

Exodus

  • Friendly and easy-to-use interface.
  • Offers a high degree of privacy by not having an account and not associating personal information with exchanges. 
  • Supports the Shapeshift cryptocurrency alongside with other popular cryptocurrencies.
  • Does not link bank accounts with the wallet, but offers the possibility to buy Bitcoin or Ether using fiat deposits.
  • The wallet can be used on Windows, Mac, and Linux, and also has mobile apps for iOS and Android. 

Copay

  • Supports Bitcoin and Bitcoin Cash. 
  • All the keys are stored locally. 
  • Addresses are generated through hierarchical determination.
  • Payment requests and verifications identified through the BIP70-BIP73 payment protocol.
  • Supports multiple wallets alongside multiple signatures.
  • Can be used for paying on some eCommerce websites, including Amazon.com.
  • Can group payments by using shared wallets.

BRD Wallet

  • Enables users to exchange Bitcoin and can also convert into other cryptos like Bitcoin Cash, and Ethereum.
  • Fully decentralized and not requiring an account, only the 12-word paper key is used to connect to the blockchain 
  • Free to use and supports the multi-signed transaction.

5. User Portrait in Europe

overview of european crypto users

Consumption habits of European users 

The EU, as well as other European countries, do not ban the use and ownership of cryptocurrencies. However, the regulators do not recognize digital currencies as “money”.

Mario Draghi, the head of the European Central Bank, announced that the ECB has no intention of issuing a blockchain-based currency alongside or as a replacement for the euro. Also, European member states may not introduce their own cryptocurrencies on a national level, either. So, it’s unlikely that Europeans will use cryptocurrency to pay for goods and services on a regional level anytime soon.

The regulators may not encourage cryptocurrencies, but let’s see how the general population sees digital assets.

According to the ING International Survey published in September 2019, 82% of European respondents had heard of cryptocurrencies, 32% agree that crypto is the future of online spending, and 27% say they are open to receiving new cryptocurrency offerings from brands they are familiar with.

Most of the respondents seem to passively receive information about cryptocurrencies through the news (33%) and social media (13%). But there are also many actively researching the topic online (33%)

Also, the respondents from 11 out of 15 countries prefer websites specialized in providing cryptocurrency-related content as a source of information when making decisions on Bitcoin investments.

Turkey (62%), Romania (44%) and Poland (43%) have a higher share of people that are positive about the future of cryptocurrency. On the other side, the Austrians (13%) are the biggest skeptics.

crypto market in europe study

Previously, the survey carried out by Ipsos for ING, revealed that the share of people owning cryptocurrency in Europe is relatively low – 9%. And while in Western Europe the percentages are lower, in Eastern European countries like Poland (11%) and Romania (12%) have the most cryptocurrency owners. However, the first position is occupied by Turkey (18%).

When asked if they would use cryptos for certain purchases and purposes, the majority (70-85%) of respondents would rather use traditional means of payments, or only look at bitcoin as an investment option. However, the respondents that considered cryptocurrencies for more answered as follows:

  • 23% would buy a cup of coffee with bitcoin;
  • 15% would receive payments in crypto;
  • 21% would use crypto to pay their taxes;
  • 21% would pay their bills in crypto;
  • 26% would buy a plane ticket;
  • 30% would use crypto for international online payments;
  • 20% would use cryptocurrency to save for tuition fees.

Considering the UK, a survey made by Finder on 2,000 Brits reveals that 97% never owned any cryptocurrency and 31% believe they are too high of a risk. From the 3% of respondents who have bought cryptocurrency, 79% have bought Bitcoin. Furthermore, Millennials and Gen x are the most likely to invest in cryptocurrencies compared to other categories.

Crypto management and deposit habits

There is no official data on the management and deposit habits of the cryptocurrency holders. However, according to the research undertaken by Bitpanda, cryptocurrency is seen as an asset people diversify into once they have the means to do so. In a top of 10 assets people invest in, crypto occupies the 7th place and isn’t seen as much of a store of value as other assets.

investments in europe

Also, the European internet users have a much greater diversification of portfolios as wealth grows. While the bottom 25% of internet users hold an average of 1.3 different types of investment, the highest wealth group (10%) have 2.4 different investments and are 2.5x more likely to have invested in cryptocurrency.

Crypto trading habits

In Europe, there are over 10 Million active crypto traders and almost 1 out of 2 active crypto traders use the Exchange platform Coinbase (47%) to buy, sell, and manage their cryptocurrency portfolio. Also, crypto traders hold on average an amount of 0.04 BTC.

6. Should Crypto Companies look to Expand in Europe?

The regulatory climate in Europe may be one of the most restrictive when it comes to cryptocurrency, and the constant effort to have crypto services providers comply under a global AML regulation may be considered a turn-off. However, this situation is present in many other jurisdictions around the world.

Therefore, it’s only a matter of time before digital assets get universally regulated. 

On the other hand, the European crypto market is one of the most developed and diverse in comparison to the rest of the world. And setting up a community marketing strategy can be an effective way of approaching European crypto enthusiasts.

Setting up a community implies a strategy that emphasizes listening to your customers and meeting their needs and desires. This way you will gather valuable information about your customers’ preferences and buying habits while also offering them a place where they feel relevant. 

Companies that offer products that require maintenance and updates and companies that offer products that can be difficult to use can get the most benefits out of a community marketing strategy. 

And, because in most cases customers tend to have similar issues, they can find their questions and problems already solved inside the community, instead of opening up new tickets through customer service.

In conclusion, the legislative aspect may prove to be difficult in the EU, but the European market has a tendency to adopt and accept cryptocurrencies, especially with support from the Mediterranean Seven initiative. 

However, it could take several years until a regulatory framework is established so the process of setting up/relocating a crypto company in Europe will be difficult for a while.

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