Germany leads Europe in crypto growth as UK lags in regulatory progress, CoinShares analyst reports
Cryptocurrency uptake in Germany is advancing via wealth managers and family offices, in contrast to the UK where the retail digital asset sector remains in its early stages, a researcher notes.
Digital asset adoption is making significant strides in Germany, especially within younger demographics, while the United Kingdom continues to lag behind, primarily due to regulatory delays, says Luke Nolan, a cryptocurrency researcher at CoinShares.
The progress of cryptocurrency adoption in Germany has been "very good" driven by "family offices, wealth managers, individual advisors" and the younger generation seeking to allocate inherited capital into digital assets, Nolan shared with Cointelegraph during the Chain Reaction program on Thursday.
By comparison, the United Kingdom remains "still very much behind," Nolan stated, noting that the Financial Conduct Authority (FCA) in the country only removed its prohibition on crypto exchange-traded products under a year ago, leaving its digital asset marketplace "nascent." The regulatory body had initially prohibited these products from retail investors in January 2021.
Within the European Securities and Markets Authority's (ESMA) Markets in Crypto Assets (MiCA) register, which was updated on Wednesday, Germany currently has 89 licensed crypto-asset service providers, representing 25.5% of all registered companies. The European Union's largest economy also topped the bloc in MiCA authorizations in June, boasting 57 approved cryptocurrency companies.
Leading German banks are venturing into crypto
Major German financial institutions are not overlooking this adoption movement.
Deutsche Bank, the nation's largest financial institution, announced on Wednesday that it is currently awaiting regulatory clearance to introduce crypto custody services for institutional clients across Europe, anticipating a license to be granted in October.
In April 2024, Landesbank Baden-Württemberg, Germany's largest federal bank, began providing crypto custody services following a partnership with Austria-based Bitpanda for its institutional custody offering.
Concurrently in the United Kingdom, the FCA issued final guidance on Wednesday detailing the circumstances under which crypto activities would necessitate authorization under the nation's forthcoming regulatory framework.
Applications for licensing will be accepted by the regulator starting Sept. 30, with companies seeking transitional arrangements before the new framework becomes effective on Oct. 25, 2027, required to submit by the Feb. 28, 2027 deadline.
On Thursday, the FCA revealed that it had dispatched a cease-and-desist letter to three locations in London believed to be enabling illicit peer-to-peer cryptocurrency trading.
Regulations bringing digital assets under the FCA's regulatory oversight were approved by the UK Parliament in February, with a comprehensive package of rules and guidance finalized in June.