Europe is witnessing clear growth as institutions expand their services to include decentralized finance (DeFi) in light of the turmoil hanging over the market.

A new state of the market report issued by blockchain analytics company Chainalysis shows that the crypto industry has recorded growth in the Central, Northern and Western Europe (CNWE) region, and the report also indicates the United Kingdom’s dominance of the market in its region, in addition to the impact of the Digital Assets Markets Act (MiCA). In the European Union on industry.

According to the findings of this study, digital asset transactions in Central, Northern, and Western European countries represented 17.6% of global crypto transactions between July 2022 and June 2023, making it the second largest region in the volume of crypto transactions after North America according to the same measure.

Financial institutions - both traditional and decentralized - are striving to engage in the decentralized finance (DeFi) sector in the aforementioned European region by establishing many projects based on the third web (web3) that are directed to investing in specific areas with clear growth, and this is clearly demonstrated by registering... Financial flows exceeding one trillion dollars to invest in this sector, which represents 54% of the total size of the technical system for digital assets, and countries in that region have also recorded growth in the use of lending applications, decentralized trading platforms, and other decentralized finance platforms.

“ CNWE

“The Central, Northern and Western Europe region includes six countries that are classified among the fifty countries that use digital currencies most in the world, namely: the United Kingdom, ranked 14th, Spain (22nd), France (23rd), Germany (26th), Italy ( 37), and the Netherlands (39). You can continue reading to learn more about the reasons behind the adoption of digital currencies in these countries.”

A detailed comparison between activities on the central platforms shows a slight decrease in the number of these activities due to market turmoil. In contrast, financial flows towards decentralized platforms increased in seven countries: Albania, Luxembourg, Latvia, Spain, the United Kingdom, France, and Lithuania.

The United Kingdom excels in the region

This year, observers expect that the United Kingdom will become a major center for the crypto industry in the coming years, and this is demonstrated by its adoption of policies encouraging the industry and legislation that have a positive impact in enhancing investor confidence.

Over the past 12 months, the UK has recorded a significant rise to $252.1 billion in crypto transaction volume, ranking 14th on Chainalysis's Global Cryptocurrency Adoption Index. Last June, the country passed the draft Financial Services and Markets Law, which adds digital assets to asset regulation laws, and also includes authorizing the government to establish laws regulating stable currencies.

Despite the direct impact that the bill had on stablecoin activities, senior crypto project officials praised the move taken by the United Kingdom, which encouraged several companies to consider moving their activities to the country.

“We are thrilled to open our first international office in a region that welcomes blockchain technology and is committed to providing a predictable business environment with regulations that embrace the third web (web3) and protect consumers,” said Chris Dixon, co-founder of a16z.

The Digital Asset Markets Act (MiCA) is a game-changer in Europe

Europe has succeeded in attracting the interest of developers and crypto entrepreneurs after the passage of the Digital Asset Markets Act (MiCA) , which is scheduled to enter into force in 2024.

This law aims to enhance financial stability in the markets through a single system adopted by many countries, which made it admired by those concerned, who considered it a very important piece of legislation. The study said in this regard: “Indeed, MiCA appears to have created a favorable environment for the development of crypto projects. “We spoke to crypto industry leaders in France, Italy and Germany to gain a deeper understanding of the impacts of this law.”

Finally, it is noteworthy that - in contrast - the laws regulating the crypto industry in the United States are still dispersed, and lack a clear path as is the case in Europe, which has led to a large number of lawsuits in which the Securities and Exchange Commission (SEC) clashed with many... Web3 companies.