Executives at Circle and Binance have said an influx of VC funding in Europe is because of the EU’s progress on regulation.
An influx of VC funding has flowed into the European crypto market over the past couple months—something executives have said is because of the landmark crypto regulation in the European Union.
Markets in Crypto Assets (MiCA), is a regulatory framework that was approved earlier this year and will likely become law in July this year.
The legislation aims to regulate crypto assets and those engaged in transacting them, whether they are people or entities. That makes it the first major step towards the regulation of the industry anywhere thus far.
The announcement has gained support from many executives in the crypto industry on Twitter, with some hoping other nations can follow in the EU’s footsteps and apply similar laws.
Patrick Hansen, the EU Policy Director at USD Coin (USDC) stablecoin issuer Circle, said that VC investment into European crypto projects is up “almost 10x in one year,” and can be attributed to new laws in the EU, specifically MiCA. He shared a screenshot from PitchBook showing that in Q2 2023, Europe accounted for 48% of all VC funding that went to crypto startups.
“Regulatory clarity attracts capital & entrepreneurs from around the world. Great development for crypto in Europe!,” he said on Twitter.
Although England is no longer part of the EU, London-based crypto startups have been especially successful securing VC funding in 2023, according to a study from investment firm Rockaway. The next two largest hubs were 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 involvement in the crypto space going into the future.
He’s certainly 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 EU. A model for other regulators to emulate.”
Many executives in the crypto space are concerned with the lack of clarity from regulators. As a result, Europe has been a bright spot during an otherwise trying time for crypto startups.
While European markets are seeing an influx of attention from new regulation, VC funding for crypto startups has taken a big tumble, falling 82%, in the first quarter of 2023.
Source : Decrypt