The UK currently has Europe’s largest crypto economy
From July 2021 to June 2022, the United Kingdom collected a staggering $233 billion in bitcoin transactions, according to research made public this morning.
The value of the deal was the greatest of any European country.
In the most recent Chainalysis survey, the nation jumped from 21st to 17th position in the index measuring the use of cryptocurrencies.
The UK is ranked sixth globally in terms of the value of crypto transactions in the eagerly awaited annual report.
Chain analysis suggests that a significant portion of the activity was DeFi-linked, with the UK accounting for close to 20% of online traffic to websites in Europe that were both tied to NFT and loan contracts.
In terms of the actual number of on-chain transactions each quarter from July 2021 to July 2022, the UK’s cryptocurrency market expanded, making it the only top-five Western European nation to do so.
This shows that the adoption of cryptocurrencies was more robust in the UK than it was elsewhere in Europe. Dion Seymour, Technical Director of Crypto and Digital Assets at Andersen LLP and former Policy Advisor at HMRC, the UK’s tax body, supports this idea.
“In the UK, we’ve attempted to offer clarity in terms of taxes and regulation of cryptocurrencies, so I’d like to assume that’s why,” he added.
“No one wants to tax cryptocurrency, but there may be some concern if there is confusion about how it would be taxed.”
Seymour also thought that the UK’s ongoing efforts to address weak consumer safeguards were crucial.
If we want DeFi to catch on, consumer protection must be taken into account, he stressed.
This year, there will be a lot of discussion among policymakers, the World Bank, the World Economic Forum, the OECD, the HMT, the FCA, and certainly the HMRC.
As the largest crypto economy in the world, Central, Northern, and Western Europe (CNWE) once again topped the Chainalysis Global Crypto Adoption Index. Between July 2021 and June 2022, users and institutions in the area acquired $1.3 trillion in cryptocurrency, and just Western Europe was home to six of the 40 biggest grassroots adopters: the United Kingdom (17), Germany (21), France (32), Spain (34), Portugal (38), and the Netherlands (39).
The majority of this activity was still driven by DeFi protocols and NFTs, while EU laws such as the crypto travel rule as well as the MiCA licencing scheme improved regulatory clarity.
On-chain activity increased by between 1 and 30% in the majority of the top ten crypto marketplaces in CNWE over the previous year. The Netherlands’ activity fell by 3%, whereas Germany’s activity increased by 47%. These two anomalies stood out, though.
Two recent decisions—to impose a 0% long-term capital gains tax and to let a wide range of asset managers participate in cryptocurrencies—are likely what led to Germany’s disproportionate rise. Data from chain analyses shows that these efforts had the impact of promoting institutional and retail adoption. Dutch authorities, on the other hand, adopted a more circumspect stance.
Changes in on-chain activities varied considerably more widely across the smaller CNWE nations. Estonia, whose activity increased by 76%, and Malta, whose activity decreased by 50% throughout the study period, are at the poles.
Between July 2021 and June 2022, Malta faced more rivalry as regions like the Bahamas, Bermuda, Abu Dhabi, and Dubai intensified their attempts to draw cryptocurrency start-ups to their territory. The “blockchain island” nevertheless has one of the most thorough regulatory systems in existence. In the meantime, Estonia, seeing fast success in its goal of becoming a key centre for cryptocurrency in central Europe, began focusing on lowering the dangers of money laundering, malware, and market contagion.
NFTs fuel DeFi activities among CNWE residents
The NFT platforms lead the pack, producing more web traffic than any other DeFi protocol variant in the CNWE, where DeFi is also widely used. This is particularly true in Ireland and Norway, where well over 70% of all web traffic connected to DeFi goes to NFT markets.
The countries having the most visitors in the DeFi category for blockchain gaming were France, Italy, and Spain. And over 30% of online traffic in these three nations was metaverse-related.
The cutting edge
In addition to being the largest cryptocurrency market in the world, CNWE has consistently been at the forefront of the industry; its adoption of DeFi is a prime example. It would be interesting to watch and see if CNWE maintains its position as an early adopter of new crypto technology and if use cases are developed.
