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14th May 2023 > > The EU.

tl;dr

The EU is reaping the tax dollar rewards from a stable and welcoming regulatory environment for cryptos.


Market Snap (at time of writing)








Market Wrap

Binance has announced it is to cease operations in Canada, a country famed for its previously liberal culture, but which is increasingly restrictive about its own citizens’ beliefs and behaviour. This decision by Binance has been driven by excessive regulation, designed not to foster innovation and development, but with a desire to restrict the growth of the crypto industry.


Which sounds all too familiar with those of us from the UK. All industry groups are complaining of excessively high taxation, and overburdensome regulation, an outcome that few would have predicted following the UK’s departure from the EU. I think it is fair to say that fears – justified or not - of a Singapore on the Thames were somewhat overstated.


The sad thing is that there is no political party of relevance in the UK advocating for anything other than higher taxes and ever more regulation in the future, leaving the UK heading for a fiscal and monetary crisis, the likes of which have not been seen since the 1970s.


Which will of course be good for cryptos.


Curious Cryptos’ Commentary – The EU

Those of us who see the ever increasing adoption of the concept and practise of decentralisation as both unstoppable, and as a boon to economic prosperity for everyone, tend to be suspicious of centralised organisations. The bigger they are, the more suspicious we become. But those of us who are also realists, recognise that there must be space for the decentralised world and the centralised world to work together.


Which is exactly what the EU has achieved.


The EU is the first governmental authority to create a sensible and far-reaching legislative and regulatory framework for crypto known as MiCA (Markets in Crypto Assets). Regular readers are already familiar with this very impressive piece of work by the Brussels technocrats and bureaucrats. I didn’t think they had it in them, but I am very pleased to report I was very wrong in that view.


Though not yet implemented, MiCA gives certainty to crypto businesses about the environment in which they will have to work, in stark contrast to the approach currently taken elsewhere, particularly the UK and the US.


And the EU is already reaping the rewards in terms of crypto tax dollars.


Patrick Hansen, EU Policy Director at Circle (the issuer of stablecoin USDC) tweeted:


“The MiCA effect.


The share of VC investment into European crypto projects is up almost 10x in one year - from a share of 5.9% in Q1 2022 to 47.6% in Q2 2023. Regulatory clarity attracts capital & entrepreneurs from around the world. Great development for crypto in Europe!”


Those of a disparaging nature have pointed out that total VC investment into cryptos has not been immune to the 2022 crypto winter. They claim that a larger share of a smaller pie is not newsworthy. As investment ramps up again, as it surely will, a larger share of a larger pie is most definitely something to crow about.


A lesson here for the UK perhaps.


Provide a welcoming environment for businesses to invest and invest they will. Do you think any of our politicians are listening? Answers as always on a postcard to CCC Towers.

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