The State of Digital Assets in Europe: The Market Maker Perspective

It’s no surprise that there’s a burgeoning appetite for digital assets in Europe. The region has experienced significant growth, with rising investment volumes and user numbers set to continue. This positive trajectory has been bolstered by the uniform and comprehensive regulatory MiCA framework to support long-term growth, the adoption of digital asset infrastructure in both private and public sectors, and the provision of crypto custody services by banks.

“Europe is taking steps towards becoming a leading digital asset market. MiCA provided clarity and certainty to industry practitioners, which is essential for the establishment and continuity of operations in the region” - Acheron Trading CEO, Laurent Benayoun, concerning Europe’s growing prominence as a geographical leader in digital assets adoption.

By the end of 2023, Europe became home to over 11,597 crypto entities, making it the global leader in crypto employment creation. Additionally, revenue in the European digital assets market is forecast to record a CAGR of 8.6% from 2024-28, resulting in a projected total amount of €26.7bn by 2028. Indeed, Europe is well-positioned for sustainable growth in the digital economy and, even in more bearish times, has demonstrated its value as a geography. 

Globally, 2022 witnessed the collapse of several industry giants, including Terra/Luna, Celsius, 3AC, and FTX, erasing $1.35 trillion (€1.26 trillion) in market capitalization. These events, along with the Federal Reserve’s rate increases, triggered a selloff in speculative assets, causing damage to the crypto community. However, despite this wave of global destruction, the impact on the EU market was less severe compared to that of the US. The European Securities and Market Authority (ESMA) reported in April 2024 that 55% of global trading volume occurs on exchanges licensed in Europe, though most transactions happen outside the region, which likely insulated European investors. While the collapse of these industry behemoths majorly influenced price volatility in 2022, the past stress on the cryptocurrency market stands in stark contrast to the healthier digital asset economy we are experiencing today. 

Trading volumes in Europe are up, projected to reach $40.5 trillion (€37.1 trillion approx.) by EOY, and the region is predicted to lead in global transaction value by accounting for 37%. ESMA is currently seeking opinions on whether to add crypto to the €12 trillion investment product market and the advent of exchange-traded products (ETPs)—the ETF counterpart—all beg the question - how does this impact market liquidity in the region? 

In conclusion, the state of digital assets in Europe from an MM perspective is one of cautious optimism. While there is much opportunity for adoption and economic growth, MMs require continual adaptation to maintain liquidity and efficiency in the dynamic digital asset market. “We are thankful for the clarity that MiCA brought to the digital asset industry in Europe through the CASP regime. It paves the way for continuing to service European clients and provides the confidence necessary to expand operations in the region, which positions Europe as a leading hub for the industry. We are actively monitoring the implementation of MiCA across jurisdictions.”

You can read more from Acheron Trading CEO, Laurent Benayoun, in the new DL Research State of Digital Assets in Europe report. Download the report here: https://assets.dlnews.com/dlresearch/the-state-of-digital-assets-in-europe-research.pdf