Europe's Leading Role in Web3
15 July 2023
VanEck has been following the developments of the blockchain industry in Europe with great interest and optimism. Europe is not only a major player in the crypto space, but also a leader in many aspects. Something called the “MiCa effect” is set out to leave its mark permanently in the crypto industry (in a positive way). For your information, MiCA regulation (Markets in Crypto Assets Regulation for the European Union) was finalized and published in June 2023. Let me share with you some of the facts that support this claim:
Europe’s Leading Role in Crypto
- Europe is home to the highest number of Bitcoin and Ethereum nodes, which are the backbone of the decentralized networks that power these cryptocurrencies. According to Bitnodes, as of July 2023, Europe has over 2,728 Bitcoin nodes and 1,956 Ethereum nodes, accounting for 42.3% and 28.9% of the global total respectively (accounting only for publicly reachable nodes with a known geographical location).
- Europe also has the largest absolute number and relative share of on-chain activity, which reflects the volume and diversity of transactions that take place on the blockchain. According to Chainalysis, in June 2022, Western Europe and Eastern Europe collectively have the largest share of on-chain transaction volume.
Source: Chainanalysis, data as of June 2022. Past performance is no indicator of future results
- Europe has the most comprehensive crypto-regulation globally, with the proposed Markets in Crypto-Assets (MiCA) regulation that aims to create a harmonized framework for crypto-assets across the European Union. MiCA will provide legal clarity and certainty for crypto-asset issuers, service providers and users, as well as enhance consumer protection and market integrity. MiCA will also foster innovation and competition by creating a level playing field for all market participants.
- Europe hosts two-thirds of global industry jobs, according to a report by Coincub. The report estimates that there are over 61,000 people employed in the crypto industry in Europe, compared to 12,845 in Asia and 12,833 in North America. While overall this is a decrease of -39% relative to 2022, we expect this to recover by the end of 2023 and the beginning of 2024 as regulation effects come into play. The report also ranks US, Germany and France as the top three countries in terms of crypto employment. According to a report of TrueUp, most open positions in June 2023 are from Binance, OKX and Token Metrics. Much like the decentralized nature of cryptocurrencies, over 25% are fully remote. As most jobs in crypto are engineering jobs, it also means that Europe likely is home to the largest number of blockchain developers.
Source: Coincub, data as of July 2023. Past performance is no indicator of future results
- Europe attracts 50% of venture-funded crypto projects globally, according to a study by Pitchbook. This figure is up approximately 7 times compares to Q1 2022. Other countries and regions have seen a significant decrease in crypto startup funding. This may be a leading indicator of a massive growth opportunity in Europe and for crypto in general.
Source: PitchBook, data as of April 2023. Past performance is no indicator of future results.
- Europe offers favourable tax regimes for crypto investors and entrepreneurs, according to a report by PwC. The report analyzes the tax treatment of crypto-assets in 29 jurisdictions around the world and ranks Malta, Portugal and Switzerland as the most attractive countries for crypto taxation in Europe. The report also notes that many European countries have issued clear and favourable tax guidance for crypto-assets, or have adopted a low or zero tax rate for certain types of crypto transactions. The reader should not perceive this as tax advice, please ask your tax advisor what taxation applies to your situation.
The MiCa Effect
These facts show that Europe is at the forefront of the blockchain revolution, and has the potential to leverage this technology to boost its economic growth and competitiveness. As a crypto specialist of a global asset manager, I am excited to be part of this journey and to help our clients navigate this fast-changing and promising landscape. For once, Europe has the chance to lead a major innovation. Our VanEck Crypto ETNs are well-positioned to benefit from the MiCa effect. Leading cryptocurrencies such as Bitcoin and Ethereum, or a basket such as Crypto Leaders or Smart Contract Leaders, is a great way to potentially benefit from the opportunity that this narrative provides. Please note that any historical performance mentioned in this article is no indicator of future results.
What is MiCAR?
MiCAR was published on the 9th of June, 2023. The first draft was created in 2018 following up after the bull run of Bitcoin in 2017. The main goal is to protect crypto users against unregulated virtual assets, fight money laundering and terrorist funding and protect the sovereignty of the Euro. It will make it significantly easier to operate in the EU and provide licensed services under MiCA’s harmonized European regulation. The regulation will apply in all EU member states as of 30 June 2024 for Asset Referencing Tokens (ARTs) and E-Money Tokens (EMTs) and 30th of December 2024 for Crypto Asset Service Providers (CASPs)
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