Three huge crypto trends to look out for in Europe in 2022

2021 has been a monumental and groundbreaking year for the fast growing cryptocurrency industry across the planet, which has institutional and retail investors alike to thank for its growth. The U.S. Securities Exchange Commission and the nation’s Federal Reserve both said they won’t ban cryptocurrency, essentially greenlighting the industry to continue to operate. And most importantly, El Salvador became the first country to make bitcoin a legal tender, blazing a new and bold path for other nations to follow.

Europe also has become a hotspot for innovation and investment in the cryptocurrency industry. This year, the U.K. became the leading country in Europe for cryptocurrency transactions, with $170bn worth of deals. Central, northern, and western Europe (CNWE) had the biggest cryptocurrency economy in the world, receiving more than $1tn worth of the digital assets over the last year according to a recent report by Chainanalysis. 

The massive investments in cryptocurrencies in Europe in 2021 is only a preview of what we are going to see next year. I believe that the immense wave of interest in Europe’s crypto market is going to explode next year, and will lead to new investments, companies and jobs. 

Below are three massive cryptocurrency trends that I think we will see in Europe in 2022. 

Brace for more institutions 

In 2021, we saw the European Investment Bank (EIB), the lending arm of the European Union (EU), use Ethereum technology to issue €100 million ($121 million) in two-year digital notes for the first time. European and American banks served as joint managers for the notes, including Goldman Sachs, Banco Santander SA and Societe Generale AG, demonstrating that American and European banks are keen on entering into this new arm in finance. 

In 2022, I expect even more European financial institutions and corporations to step into the crypto space. Just recently Adidas made a dive into crypto, establishing a partnership with Coinbase as well as with metaverse playground The Sandbox. Plenty of crypto and corporate partnerships like this will happen next year as the adoption of cryptocurrency across Europe accelerates. 

This is only the beginning and there is much more that we can do in Europe. Corporates will use the metaverse to show off their products and services - powered by digital assets like Ethereum and Bitcoin. 

European businesses of all sizes will begin to hold bitcoin as an inflation hedge on their balance sheets. Banks across Europe, once regulations are more clear next year, will surely step into the space, as their clients demand it more than ever. 

There are countless ways that banks and corporations can get into the fast growing crypto space in Europe, and much of this will start unfolding in 2022. 

Regulation will become clearer

Europe’s regulatory regime will become significantly more clearcut in 2022 by laying out clear rules and regulations for the industry to follow. And this could happen very soon, possibly early next year. 

We have already seen that the EU proposed framework for regulating crypto is getting closer to ratification. On November 24th 2021, the European Council, which sets the EU’s political agenda, adopted its position on the Markets in Crypto Assets (MiCA) framework, according to a statement on its website. This means that the Council and the European Parliament can start negotiations on the proposition before it becomes law. This agreement also created the Council’s negotiating mandate for talking about MiCA with the European Parliament.

The MiCA framework promises to make it easier for crypto firms to expand throughout the region by facilitating a passportable license. Although the COuncil said that the MiCA regulations do not apply to non-fungible tokens (NFTs). 

But I am sure that we will see EU authorities step into that space after they finish laying the groundwork for the industry. This is all going in the right direction - the clearer the regulations, the better for the industry. 

The era of CBDC

With many countries across the world looking into building out their own central bank digital currency (CBDC), 2022 could be the year where we see the Eurozone make significant headways in making this idea a reality. 

In July this year, The Governing Council of the European Central Bank (ECB) decided today to launch the investigation phase of a digital euro project. 

According to the ECB statement, “The investigation phase will last 24 months and aim to address key issues regarding design and distribution. A digital euro must be able to meet the needs of Europeans while at the same time helping to prevent illicit activities and avoiding any undesirable impact on financial stability and monetary policy. This will not prejudge any future decision on the possible issuance of a digital euro, which will come only later. In any event, a digital euro would complement cash, not replace it.”

This is going in the right direction. I believe that hopefully the digital euro will be used just like Bitcoin, complimenting each other. 

Final thoughts

Europe is already a leader in cryptocurrency innovation and investment. But if the government can get the regulations right by balancing investor protection laws with the industry’s need to be innovative, it could ensure Europe’s leadership in the industry for years to come.