This post is an excerpt from the 2024 Cryptocurrency Geography Report. Download your copy now.
Central, Northern and Western Europe (CNWE), the world’s second-largest cryptocurrency economy after North America, will receive an on-chain value of $987.25 billion from July 2023 to June 2024, leading to global accounted for 21.7% of the trading volume. Cryptocurrency activity grew in most countries in the CNWE, with an average year-on-year (YoY) growth rate of 44%. The United Kingdom (UK) remains CNWE’s largest crypto economy, receiving $217 billion in crypto and ranking 12th on the Global Crypto Adoption Index.
For transactions under $1 million, i.e. professional ($10,000-$1 million) and personal (less than $10,000) remittances, Bitcoin (BTC) recorded a growth of nearly 75%, surpassing all CNWE It was the highest among asset types. Across all transaction sizes, BTC accounted for $212.3 billion, or about one-fifth of the total amount received on-chain by CNWE. As seen in the graph below, although the growth rate of BTC activity in CNWE for transactions under $1 million is lower than in North America, the former outperforms the latter in terms of growth in all other asset types, especially stablecoins. I did.
CNWE saw stablecoin trading volume increase 2.5x compared to North America for transfers of less than $1 million. CNWE’s stablecoin value across all transaction sizes accounted for nearly half ($422.3 billion) of total crypto inflows. Looking at average monthly inflows, the chart below shows how stablecoin transfers of less than $1 million have been made over the past year, averaging between $10 billion and $15 billion per month. It is being done.
Although inflows decreased in May and June 2024, the proportion of stablecoin transactions increased, indicating robust usage despite the market decline following the bull market. Looking further back over the last two years of CNWE, stablecoins have dominated other asset types. The chart below examines purchases made for less than $1 million by asset type. As you can see, from July 2022 to June 2024, stablecoins had an average share of 52.36% of transactions across asset types.
Last year, the proportion of stablecoins purchased by CNWE with fiat currency was disproportionately larger than the proportion of BTC. The chart below uses order book data (a list of buy and sell orders for an asset or security) to complement on-chain activity, with a 24% share of stablecoin purchases traded in fiat currencies. shows that the Euro (EUR) accounts for 6% share of BTC purchases. Conversely, the US dollar (USD) makes up a larger portion of BTC purchases than stablecoin purchases.
This data suggests that when it comes to crypto-to-fiat trading, CNWE is more optimized for crypto users buying stablecoins than acquiring BTC.
To learn more about stablecoin activity in the region, we spoke to BVNK, a global company that provides a multi-asset platform for stablecoin payments. Chris Harmse, co-founder and chief business officer of BVNK, said: We think they coexist and we need to bridge the gap with the fiat world. ”
Harms confirmed that Chainalysis’ findings on stablecoin usage in the region are consistent with the company’s observations. BVNK’s business clients purchase stablecoins to support a variety of payment use cases. For consumers of these companies, 90% of payments are made using stablecoins. BVNK is explained in detail in the next section.
Seller services are booming in the UK
CNWE has the second-largest merchant services market in the world after CSAO, with growth of 58.4% year-on-year, primarily driven by the UK.
Stablecoins are the most commonly used asset type in these services, consistently accounting for 60-80% of the market share every quarter, as seen in the chart below.
As one of the merchant service providers that enables stablecoin transactions for businesses in the UK and Europe, BVNK covers B2B and B2B-to-consumer (B2B2C) use cases, such as the following examples:
Payments: Fintechs or payment service providers provide faster and cheaper payment rails than traditional finance (TradFi) to help merchants settle their invoices. Pay-In: When a consumer wants to pay a business using a stablecoin (e.g., to deposit money into a trading platform, replenish a gaming or sports betting account, or make an online purchase), BVNK’s business customers can leverage APIs to pay businesses using stablecoins. Deliver currency. payment gateway. Payments: Money service businesses (MSBs) use stablecoins to pay contractors and employees. Many of them live in South America, where they have experienced currency devaluation or do not have access to the US dollar.
Speaking of which, citizens of countries like Argentina, which recorded a 143% inflation rate in the second half of 2024, are turning to stablecoins to cushion the effects of currency devaluation.
“There are emerging markets where companies are starting to see stablecoins as fungible,” Harmse said. They are unable to pay their bills on time and are taking advantage of global trade flows by using stablecoins to pay for them.”
The average transaction size on BVNK’s platform is between $100,000 and $250,000, and payments in that range are typically large business transactions used to settle invoices, as mentioned above. Most of the B2B transactions processed by the company are cross-border payments, and the majority of stablecoin payments are destined for Latin America. Consumer payments processed through BVNK’s platform range from $100 to $1,000.
When asked about new or surprising use cases for stablecoins, Harmse mentioned micropayments to freelancers in the gig economy. Again, these are typically cross-border payments where traditional payment methods are too costly. He also said that more nonprofits and NGOs in the region are starting to use cryptocurrency payments (particularly stablecoins) to more quickly get aid to conflict zones in times of crisis. .
Payhound is another CNWE company that provides merchant services. It is a Malta-based cryptocurrency payment processor serving the country’s online gaming industry, offering payments and large-scale transactions. While the majority of Payhound’s revenue comes from the latter, the company also recognizes the value and potential of payment processing products.
“We believe there is strong appetite and interest from online businesses to offer as many options as possible, especially more innovative payment methods,” said Elton Dimech, managing director of Payhound. said.
Tokenization of real-world assets gains momentum
Regional experts shared that the tokenization of real world assets (RWA), although in its early stages, is gaining traction at CNWE this year. Philipp Bohrn is Vice President of Public Affairs and Regulation at Austria-based cryptocurrency exchange Bitpanda. “We are seeing RWA tokenization projects gaining momentum across Europe, particularly in areas such as real estate, intellectual property, and collectibles such as art, cars, and wine,” he said.
We also spoke to Sylvain Prigent, Chief Product Officer at Societe Generale Forge (SG-FORGE), a fully integrated and regulated subsidiary of the Societe Generale Group. SG-FORGE is paving the way for the adoption of security tokens, particularly with the first digital green bond issuance registered directly on the Ethereum public blockchain last year, increasing transparency and traceability of ESG data. Prigent believes that security tokens and RWA in general create an accessible investment opportunity in a traditionally competitive securities market. According to Prigent, a lot of development has gone into making this new infrastructure seamless for TradFi.
CNWE ranks 4th in the world in DeFi growth
CNWE’s DeFi activity over the past year was on par with the global average. The region outpaced North America, East Asia, and MENA in year-over-year growth, accounting for $270.5 billion of all cryptocurrencies received in the region.
While decentralized exchanges (DEXs) drove much of CNWE’s DeFi growth, inflows into most other DeFi service categories have declined in recent quarters. NFTs and bridges briefly surged in the first quarter of this year, but have since subsided and returned to year-ago levels. Loans continued to increase until the fourth quarter of 2023, but steadily declined in 2024 and have not yet recovered.
Similar growth trends are largely mirrored around the world, but DeFi grew faster in the CNWE than globally. In CNWE, the growth rate of bridges and NFTs was 2x, while in the rest of the world it was only 1.5x.
The future of cryptocurrencies in Central, Northern Europe and Western Europe
This summer, the European Union’s Cryptoassets Market Regulation (MiCA) came into effect for stablecoins, which have been gaining market share across CNWE over the past year. However, the region is yet to feel the regulatory effects of MiCA on benchmark crypto asset service providers (CASPs), which will take effect in December. We interviewed several experts about the potential regulatory impact of MiCA across the EU.
“The big challenge remains regulatory uncertainty and the complexity of cross-border compliance,” says Philip Bourne of Bitpanda. “There also appears to be an educational gap, and many participants are unaware of how tokenization projects work and what their benefits and risks might be. We believe there is a huge opportunity here. By closing this knowledge gap and creating a clear regulatory framework, we can unlock the true potential of asset tokenization, drive innovation and improve global finance. We can achieve strong growth in the market.”
Payhound’s Elton Dimech discussed how MiCA could impact payment processors, particularly those serving CNWE’s online gaming industry. “Malta has a strong framework and has to compete with other companies with little regulation. Therefore, if sellers want an easier way, we are not the right option for them Once MiCA comes into force, this will completely change. I look forward to regulators within the EU enforcing this new regulation so that there is a level playing field for all crypto asset service providers. Masu.”
MiCA’s CASP rules are scheduled to take effect in December, and compliance teams will be at the forefront of implementation and associated control enhancements. Sophie Bowler, group chief compliance officer at Zodia Custody, a UK-based company that bridges the gap between TradFi and cryptocurrencies, shared the company’s views.
“We believe regulation is the key to mainstream adoption of digital assets and further success and innovation,” Bowler said. “Regulatory clarity will not only allow digital asset companies to develop new products with confidence, but also allow more traditional financial institutions to approach digital assets within a clearly defined regulatory framework. will also be encouraged.”
And as MiCA rolls out within the EU, the UK continues to evolve its own regulatory framework.
“Companies that are unable or unwilling to meet MiCA’s requirements may move to the UK market in the short term,” Mr Bowler said. “However, this is temporary as UK crypto law is expected to be closely aligned with MiCA and the FCA’s crypto law package roadmap and associated consultation document are expected to be introduced in early 2025. We believe this roadmap will provide a clearer timeline for these legislative changes.”
At Chainalysis, we are monitoring the final stages of MiCA’s rollout and regulatory developments in the UK, with an eye on how these measures will impact cryptocurrency adoption in the coming year.
