Investment: has the European Union become so attractive?

Wednesday, May 24, 2023

Buoyed by the arrival of MiCA regulations, the European Union is attracting crypto companies and investors. Since the beginning of the year, it is the geographical area that has attracted the most capital, ahead of North America. But this situation may not last.

In total, they captured 50% of the investments made worldwide over the first quarter, well ahead of North America (30%). The remaining 20% is mainly accounted for by the Middle East and Asia.

There are several reasons for this dynamic. Firstly, the projects. "There is no longer any doubt about the quality of projects and teams in Europe, particularly in decentralised finance and payments, and foreign investors are well aware of this," explains Julien Bouteloup, founder of crypto investment fund Stake Capital.

Without naming them all, Morpho, Angle, Mangrove, Rise, Swaap Finance and other start-ups have attracted capital from both the EU and, of course, the US and Asia.

Regulation obviously also plays a (very) big role in this dynamic. "It's even the major point", explains a French investor. With the arrival of MiCA (Markets in Crypto-Assets), several foreign investment funds see the European Union as a market where companies will succeed in thriving. "The rules are clearer, there is visibility, so it's having a positive impact," stresses Ivan de Lastours, head of blokchain and crypto at Bpifrance.

Beyond these good figures, it's the question of the sustainability of this momentum that raises some questions. For while the European Union has its strengths, it is also benefiting from a favourable context with the US regulatory offensive. Investors are turning away from the United States, but that's only temporary," insists a German investor. Once things have calmed down, the Americans will go back to investing mainly in their market."

Other European players also point to the fact that the EU has overtaken North America because European funds were lagging behind. "The Americans raised in 2020 and invested a lot in 2021 and 2022, whereas the Europeans raised later, so they are investing more in 2023, but they won't be able to do it for long," explains a French business angel.

This analysis is not investment advice. It has been prepared without taking into account your personal situation, particularly your financial situation, risk profile, and investment objectives.

Before investing in any product, investors should fully understand the risks involved and consult their own legal, tax, financial, and accounting advisors.

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