The United Kingdom is the largest cryptocurrency economy in Central, Northern and Western Europe

17 October 2024

Written By FinTech Alliance in FinTech

New research released today by the blockchain data platform Chainalysis, confirms the United Kingdom is the largest cryptocurrency economy in Central, Northern and Western Europe (CNWE). Ranking twelfth and rising up two places since 2023 in Chainalysis’ global crypto adoption index, the UK received $217 billion in crypto value on-chain between July 2023 and June 2024. 

Merchants services are thriving and a key aspect of the UK’s growth. CNWE has the second largest merchant service market in the world next to Central and Southern Asia and Oceania (CSAO), and this is being driven by the 58.4% growth year on year in the UK. Stablecoins are the most commonly used asset type in these services, consistently accounting for 60-80% of the market share each quarter. 

Commenting on the report, Jordan Wain, UK Public Policy Lead at Chainalysis said: “The UK’s current position in the global adoption of digital assets is encouraging considering the recent headwinds and hurdles. The country’s progress versus other European neighbours is notable, when taking into account the recent government transition and the general slowdown in the development of regulatory policies. The UK has a significant opportunity to leverage the high levels of grassroots adoption to foster the sector’s growth. Therefore, it’s important the Labour government capitalizes on these drivers of success to ensure the UK positions itself as a global leader in the space and that, like their initiatives around other frontier technologies, blockchain technology and digital assets are recognised and supported as real foundations for national growth”

Crypto activity is growing in CNWE overall

Beyond the UK, Central, Northern, & Western Europe (CNWE) overall is the second largest cryptocurrency economy in the world after North America, receiving $987.25 billion in value on-chain between July 2023 and June 2024, accounting for 21.7% of global transaction volume. Most countries in CNWE saw crypto activity grow, averaging a 44% growth rate year-over-year (YoY). After the UK, Germany ($125.3 billion), France ($101.2 billion) and Netherlands ($83.3 billion) all received the highest amounts of value on-chain in CNWE between July 2023 and June 2024.

Stablecoins are dominating market share in CNWE 

For transfers less than $1 million, CNWE saw growth in stablecoin volume 2.5x greater than North America. CNWE’s stablecoin value across all transaction sizes accounted for almost half ($422.3 billion) of its total crypto inflows. Though inflows decreased in May and June of 2024, the share of stablecoin transactions increased, indicating strong usage despite the post-bull run market decline. Over the last two years in CNWE, stablecoins have dominated other asset types, averaging a 52.36% share of transactions across asset types between July 2022 and June 2024. However, it remains to be seen how the European Union (EU)’s Markets in Crypto-Assets Regulation (MiCA) stablecoin regime and this December’s regulatory effects on crypto-asset service providers (CASPs) will fully impact the region. 

Commenting on dominance of stablecoins in CNWE, Chainalysis Head of Policy Europe Matthias Bauer-Langgartner said: “Our data demonstrates that stablecoins are currently the biggest and fastest growing use case for crypto-assets in Central, Northern and Western Europe. As MiCA’s stablecoin regulatory regime continues to take full effect, and with further legislation to become applicable, it’s important the EBA and ESMA continue to refine any nebulous aspects of the regulation to ensure they do not unnecessarily impact the momentum we’re seeing in the region. Better clarity will be needed to ensure all stakeholders, including regulators, can continue to navigate the new regulatory landscape effectively, and foster a thriving, but equally robust and secure crypto-asset market.”

In Eastern Europe, institutions and DeFI are powering crypto growth

Despite war and regulatory questions in this part of the region, Eastern Europe is the fourth largest cryptocurrency market globally, receiving $499.14 billion in value on-chain between July 2023 and June 2024. Centralised exchanges (CEXes) received the most crypto in the region at nearly $324 billion, and DeFi activity grew significantly in the past year with $165.46 billion in crypto, a third of the region’s inflows.

In this year’s global crypto adoption index, regional leaders Ukraine and Russia ranked 6th and 7th, respectively, with Russia advancing six places from last year’s ranking. Both countries’ crypto markets are thriving despite the ongoing war and intensifying international sanctions regime against Russia, which led Eastern Europe with $182.44 billion in crypto inflows as shown below. Ukraine followed, receiving $106.1 billion in crypto.