An influx of VC funding has flowed into Europe’s crypto market in recent months—something executives say is due to significant crypto regulation in the European Union.
Markets in Crypto Assets (MiCA), a regulatory framework that was approved earlier this year and is likely to become law in July of this year.
The legislation aims to regulate crypto assets and those who transact them, whether they are individuals or entities. That makes it the first major step toward industry regulation anywhere to date.
The announcement drew support from several crypto industry executives on Twitter, with some hoping that other countries will follow the EU’s steps and apply similar laws.
Patrick Hansen, the Director of EU Policy at USD Coin (USDC) stablecoin issuer Circle, said that VC investment in crypto projects in Europe is “almost 10x a year,” and can be attributed to the new EU laws, especially MiCA. He shared a screenshot from PitchBook that shows that in Q2 2023, Europe accounted for 48% of all VC funding that went to crypto startups.
“Regulatory clarity attracts capital and entrepreneurs from all over the world. Great development for crypto in Europe!,” he said. on Twitter.
Even if England is no longer part of the EU, London-based crypto startups will be more successful in getting VC funding in 2023, according to a study from investment firm Rockaway. The next two largest hubs are Zurich and Berlin.
According to Rockaway, VC funding for crypto startups in Europe totaled $5.7 billion last year.
Hansen said he sees the legislation as a way to increase investment and participation in the crypto space going forward.
He was definitely not the only one. Richard Teng, Binance’s regional head for Asia, Europe, and MENA, wrote on Twitter: “The new MICA framework provides regulatory clarity and consistency for crypto businesses in the EU. A model for other regulators to follow. “
Many executives in the crypto space are concerned about the lack of clarity from regulators. As a result, Europe is a bright spot during a trying time for crypto startups.
While the European markets saw an influx of attention from the new regulation, VC funding for crypto startups took a huge plunge, falling 82%, in the first quarter of 2023.
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