A new paper reveals that Great Britain is now the foremost ‘crypto economy’ in Europe in a further mainstreaming of the space. Crypto Lists explores more.
An official authority report was released on Friday indicating that the United Kingdom got an astonishing $233 billion of the raw transaction value of digital assets from July 2021 to June 2022. It puts the island nation on record as having the highest value transactions amongst European countries.
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Chainalysis Report Supports UK’s Crypto Status
In line with its crypto transactions soaring, the country has also significantly improved in rank regarding crypto adoption. A Chainalysis report showcased that more individuals buy crypto in the UK, with the nation leaping up in the crypto adoption index from 21st place last year to 17th in 2022. The Chainalysis report has been a highly anticipated document in the cryptosphere. It also highlighted that UK crypto transactions are the sixth largest globally.
According to the Chainalysis report, much of the UK crypto transactions were in Decentralized Finance (DeFi). They represented about 20% of internet traffic of lending contract-related websites and NFTs in Europe.
UK Crypto Adoption Resilience
Another highlight of the nation’s uptake of crypto is its consistency in the growth of its on-chain transactions in each quarter from last year. It was the only top-five Western European nation whose crypto market grew from July 2021 to June 2022. This statistic highlights that UK crypto adoption rates were more resilient than other European jurisdictions. Andersen LLP’s Crypto and Digital Assets Technical Director and ex-HMRC’s Policy Advisor, Dion Seymour, strongly supports the notion.
He stated that the resilience of the country’s crypto adoption is due to the nation’s attempts to provide certainty in crypto regulation and taxation. He points out that several players do not want crypto to be taxed and that uncertainty about how to tax the industry leads to some level of anxiety.
Seymour also believes the country’s resolution to address insufficient consumer protections was essential for individuals and firms to buy crypto in the UK. He insists that consumer protection is critical for DeFi to become mainstream. He expects conversations among policymakers to continue. It involves bodies such as Organisation for Economic Co-operation and Development (OECD), HM Treasury (HMT), The Financial Conduct Authority (FCA), HM Revenue and Customs (HMRC), World Economic Forum (WEF), and the World Bank.
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Central, Northern, and Western Europe Represents the Largest Global Crypto Economy
It’s no surprise that Central, Northern, and Western Europe (CNWE) was leading in Chainalysis Global Crypto Adoption Index as the largest crypto economy. It led in many years before. The region represented by individuals and institutions received $1.3 trillion in cryptocurrency from July 2021 to June 2022. Western Europe had six of the 40 most notable grassroots crypto adopters. These included the United Kingdom at 17, Germany at 21, France at 32, Spain at 34, Portugal at 38, and the Netherlands at 39. DeFi protocols and NFT yield these transactions after enhanced regulatory clarity. The regulatory clarity in the EU was mainly from the MiCA licensing regime and the crypto travel rule.
Leading markets in the region
On-Chain activity experienced an increase of between 1%-30% over the previous year amongst the ten largest crypto markets in the CNWE. However, some outliers experienced different fortunes with Germany increasing by 47% and the Netherlands decreasing by 3%.
Germany’s significant rise was due to enforcing a 0% long-term capital gains tax and facilitating asset managers’ investments in cryptocurrencies. This led to increased retail and institutional adoption. The Netherlands’ decrease was down to its regulators being more cautious.
In smaller CNWE nations, changes in on-chain activities fluctuated to a great extent. Estonia’s 76% increase compared to Malta’s 50% decrease within the study period paints a clear picture of the extremes. Malta confronted increased competition from nations such as Bahamas and Bermuda and purviews including Abu Dhabi and Dubai in attracting crypto startups. Despite this rivalry, the ‘blockchain island’ has amongst the most comprehensive regulatory frameworks. Meanwhile, Estonia experienced expeditious success as the Central European crypto hub. It already had regulation initiatives in money laundering, market contagion risks, and ransomware.
NFTs’ Importance in Driving DeFi activity in CNWE
NFTs spur the most web traffic compared to other DeFi protocol types in the CNWE region. Ireland and Norway are a true testament to this where NFT marketplaces account for over 70% of DeFi-related web traffic. Blockchain gaming contributed the second most web traffic to DeFi categories. France, Italy, and Spain led in the region concerning blockchain gaming.
The CNWE region continues to be the leading cryptocurrency market and provides a roadmap for the crypto world. It has highly embraced DeFi and overall crypto adoption. There are continuous innovations and developments in the cryptoverse with increased use cases.
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