There are more cryptocurrency startups in Europe than in the US, and the EU wants to push for better regulations. Liechtenstein’s Blockchain Act could serve as the blueprint.
Europe is said to lag behind the US in terms of technological development, and in many areas, that’s certainly true. However, when it comes to blockchain and cryptocurrencies, Europe has created favorable conditions that attract more and more such businesses.
According to Crunchbase, there are about 952 startups, businesses, and organizations in Europe’s cryptocurrency sector. The EU alone has 498 such organizations, and a significant portion is located in Switzerland and Liechtenstein. In comparison, there about 877 registered cryptocurrency businesses in the US. So for once, Europe seems to be more attractive than the US.
Liechtenstein among the most attractive locations in Europe
According to reports by CoinIdol, the most favorable places for blockchain and cryptocurrency businesses in Europe are Liechtenstein, Switzerland, the United Kingdom, Luxembourg, Gibraltar, and Malta. Those are the countries where governments have made an effort to create favorable legislation for blockchain businesses.
Blockchain startups within the EU also tend to raise more capital via token offerings. Again, that is tied back to regulations because European regulators have not cracked down on ICOs and STOs the same way as in the US, where there is no clear framework for handling token issuances. Although that’s not so clear in Europe either, there is an essential distinction between utility tokens, security tokens, and payment tokens. In some countries, like Liechtenstein, issuers will find some of the most advanced regulatory frameworks globally.
Many token offerings in the US have failed because of the US Securities and Exchange Commission SEC. An example is the watchdog’s hostility against Telegram Open Network (TON). Telegram then later abandoned its TON project, after a long battle with the SEC in court. Of course, these kinds of high-profile failures discourage other companies from token issuances in the US, and some will decide to come to Europe.
EU plans Regulatory Sandbox by 2022
The European legal framework is somewhat fragmented as well, although more accommodating than in the US. The EU has announced a Blockchain Regulatory Sandbox by 2022 and wants to become a “global standard-setter” in the blockchain sphere. This Regulatory Sandbox will be a joint project of the European Commission and the European Blockchain Partnership (EBP).
“By making rules safer and more digital-friendly for consumers, the Commission aims to boost responsible innovation in the EU’s financial sector, especially for highly innovative digital startups, while mitigating any potential risks related to investor protection, money laundering, and cyber-crime,” the commission stated.
As the Crunchbase data indicates, Europe is already well-positioned to walk ahead of the US in crypto-finance, but more effort is needed. Liechtenstein has undoubtedly benefited from Europe’s lack of progress in the past years, and so has Switzerland. Both countries might serve as a blueprint for European regulations, and both countries will also benefit if Europe starts pushing more for cryptocurrency adoption. Otherwise, crypto and blockchain innovation may one day come to Europe from China.