UK is now the largest crypto economy in Europe

Thursday October 20, 2022 10:59 am

According to an official report released this morning, the UK received a whopping $233 billion in raw cryptocurrency transaction value from July 2021 to June 2022.

It was the highest crypto transaction value of any European nation.

The country has also jumped up the crypto adoption index, moving up from 21st last year to 17th in today’s Chainalysis report.

The highly-anticipated annual document ranks the UK as the sixth-largest crypto transaction value country in the world.

Chain analysis shows that much of the activity was related to DeFi, with nearly 20 percent of web traffic to both NFT and loan agreement-related sites in Europe originating from the UK.

The UK crypto market was also the only one of the top five Western European countries to grow in each quarter from July 2021 to July 2022 in terms of raw number of on-chain transactions.

This suggests that crypto adoption rates in the UK have been more resilient than elsewhere in Europe – a notion supported by Dion Seymour, crypto and digital assets technical director at Andersen LLP and former policy advisor at HMRC, the UK tax authority .

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“I’d like to think that’s because we’ve been trying to bring some certainty to crypto regulation and taxation in the UK,” he said.

“Nobody wants crypto to be taxed, but when there is uncertainty about how it will be taxed, that can also cause a degree of dismay.”

Seymour also believed that an important factor was that the UK continued to crack down on inadequate consumer protection.

“Consumer protection is an important consideration if we want DeFi to go mainstream,” he added.

“We will continue to see many conversations between policymakers, the World Bank, the World Economic Forum, the OECD, the HMT, the FCA and of course HMRC this year.”

Central, Northern and Western Europe (CNWE) again topped the Chainalysis Global Crypto Adoption Index this year as the world’s largest crypto economy. Users and institutions across the region received $1.3 trillion in cryptocurrency from July 2021 to June 2022, and Western Europe alone was home to six of the top 40 cryptocurrency adopters: the UK (17), Germany ( 21), France (32), Spain (34), Portugal (38) and the Netherlands (39).

DeFi protocols and NFTs continued to drive the bulk of this activity, with EU regulations such as the crypto travel rule and the MiCA licensing scheme bringing more regulatory clarity.

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On-chain activity grew by 1-30% YoY in most of the top 10 crypto markets in CNWE. But two outliers stood out: Germany, whose activity grew by 47%, and the Netherlands, whose activity shrank by 3%.

Germany’s outsized growth was likely a by-product of two recent decisions: (1) enforcing a 0% long-term capital gains tax, and (2) allowing many different types of wealth managers to invest in cryptocurrencies. Chain analysis data suggests that these measures drive both retail and institutional adoption. The Dutch regulators, on the other hand, adopted a more cautious tone.

In smaller CNWE countries, changes in on-chain activity varied much more. At the poles are Estonia, whose activity increased by 76%, and Malta, whose activity halved in the period under review.

Malta faced increased competition from July 2021 to June 2022 as countries like the Bahamas and Bermuda, and jurisdictions like Abu Dhabi and Dubai increased their efforts to attract crypto startups to their region. Nevertheless, the “blockchain island” still has one of the most comprehensive regulatory frameworks in the world. Estonia, meanwhile, has seen rapid success in its quest to become a Central European crypto hub, turning its attention to reducing money laundering, ransomware and market contagion risks in May 2022.

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NFTs encourage DeFi activity among all CNWE citizens

DeFi is also popular elsewhere in CNWE, and NFT platforms lead the way, driving the most web traffic of any other DeFi protocol type in the region. This is especially true in Ireland and Norway, where traffic to NFT marketplaces accounts for more than 70% of all DeFi-related web traffic.

Blockchain gaming was the second most visited DeFi category in CNWE, with France, Italy and Spain leading the field. In these three countries, more than 30% of web traffic was Metaverse-related.

the cutting edge

In addition to being the world’s largest cryptocurrency market, CNWE has always been at the forefront of the cryptocurrency world – the adoption of DeFi in the region is a great example. As new crypto technologies and use cases emerge, it remains to be seen whether CNWE will retain its status as an early adopter.

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