Over the past several months, the European crypto market has experienced an influx of VC funding. According to executives, the situation is attributed to the revolutionary regulation of crypto across the EU.
MiCA Attracts Increased Support From Crypto Executives
Earlier this year, the Markets in Crypto Assets (MiCA) regulatory framework was approved, and by July, it is highly likely to become law. It plays a critical role in regulating crypto assets as people and entities engaged in transacting them. It is a major phase of the crypto industry’s regulation. Via Twitter, several executives in the crypto industry have expressed support for the move.
Further, some believe in the need for other countries to embrace the European Union’s footsteps and embrace these regulations. According to the European Union Policy Director at USD Coin (USDC), Patrick Hansen claimed that VC’s initiative to invest in European crypto projects has risen nearly 10 times within a year.
MiCA Attracts Venture Capital Funding in EU
The rise can be linked to new regulations in the European Union, explicitly MiCA. The policy director posted a screenshot revealing that in the second quarter of 2013, Europe’s share of the VC funding directed towards crypto startups was 48 percent.
Via Twitter, Patrick Hansen claimed that regulatory clearness is critical in attracting entrepreneurs and capital from around the globe. A study by investment firm Rockway shows that London-based crypto startups have experienced major success when seeking funding. This is despite England not being a part of the European Union. The other two major hubs included Berlin and Zurich.
Rockway also claims that last year, Europe’s crypto startup funding amounted to 5.7 billion dollars. Hansen believes the law is the best way to enhance crypto space investment and involvement. Further, a Twitter post by Binance’s regional head for Europe, Asia, and Mena, Richard Teng, revealed that the new model benefits crypto organizations in the EU by offering regulatory clarity and consistency.
Crypto Space Consider MiCA a Template for Regulatory Framework
As such, other regulators can emulate it. It has also been established that most crypto space executives have concerns regarding the failure of regulators to promote clarity. Hence, Europe remains a good thing amidst a trying moment for crypto startups. Despite an influx of attention from new regulations across European markets in the first quarter of 2023, VC funding has experienced a drop of 82 percent.
The approval of the framework obligates compliance from crypto asset service providers (CASPs) and virtual asset providers (VASPs).
MiCA seeks to harmonize the regulatory framework upon which all CASPs will be monitored regardless of their origin and geographical location. The harmonized framework will ease cross-border operations and enhance consumer protection.
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