Chainalysis Report Confirms UK’s Crypto Dominance
Alongside its booming crypto transaction volumes, the UK has made notable progress in crypto adoption. A report from Chainalysis revealed that more people are buying crypto in the UK, moving up in the crypto adoption index from 21st place in 2021 to 17th in 2022. The report, highly anticipated in the crypto space, also noted that the UK ranks as the sixth largest crypto transaction market globally.
According to Chainalysis, a significant portion of these transactions in the UK are attributed to Decentralized Finance (DeFi), which accounts for about 20% of Europe’s traffic related to lending contracts and NFTs.
The UK’s Consistent Crypto Growth
The UK has shown impressive resilience in crypto adoption, with its on-chain transactions growing each quarter throughout the past year. It was the only country among the top five Western European nations to experience crypto market growth from July 2021 to June 2022. This demonstrates that the UK has been more resilient in embracing crypto than other European countries, according to Dion Seymour, Technical Director of Crypto and Digital Assets at Andersen LLP.
Seymour attributes this to the UK’s efforts to provide regulatory clarity and address taxation concerns within the crypto space. The government has worked to ensure that consumer protection is a priority, which Seymour believes is crucial for DeFi to reach mainstream adoption. Ongoing discussions among policymakers, including bodies such as the OECD, HM Treasury (HMT), and the FCA, are expected to continue.
Central, Northern, and Western Europe Leads Global Crypto Economy
It’s no surprise that Central, Northern, and Western Europe (CNWE) remains at the forefront of the global crypto economy, according to the Chainalysis Global Crypto Adoption Index. This region accounted for $1.3 trillion in cryptocurrency transactions between July 2021 and June 2022. Six of the 40 most significant grassroots crypto adopters are from Western Europe, including the UK at 17, Germany at 21, France at 32, Spain at 34, Portugal at 38, and the Netherlands at 39.
Increased regulatory clarity, particularly through the MiCA licensing regime and the crypto travel rule in the EU, has led to the rise in DeFi protocols and NFTs within the region.
Top Crypto Markets in the Region
On-chain activity across the top ten crypto markets in CNWE showed increases ranging from 1%-30% compared to the previous year. Germany saw a significant 47% increase, while the Netherlands experienced a 3% decrease. Germany’s success can be attributed to its favorable tax policies, such as a 0% long-term capital gains tax, which has encouraged retail and institutional crypto adoption.
In contrast, Malta, despite its comprehensive regulatory framework, has faced increased competition from regions like the Bahamas, Bermuda, Abu Dhabi, and Dubai, which have been attracting more crypto startups. Meanwhile, Estonia has emerged as a Central European crypto hub, benefiting from its advanced regulations around money laundering and market risks.
The Role of NFTs in Boosting DeFi in CNWE
In CNWE, NFTs are driving significant web traffic to DeFi protocols. Countries like Ireland and Norway see over 70% of DeFi-related traffic coming from NFT marketplaces. Blockchain gaming has also contributed to the growth of DeFi, with France, Italy, and Spain leading the charge in blockchain gaming adoption.
The CNWE region continues to be the world’s leading crypto market, providing a model for global crypto adoption. As DeFi and overall crypto adoption expand, the region remains at the forefront of innovation and growth in the cryptoverse.
