Is Europe a safe haven for crypto?

READ TIME - 1 min 27 seconds

Author

Daniel Akpobare
May 30, 2023

GM, this is The Crypto Explorer, Let's face it, trying to keep up with crypto is like catching a greased-up pig.

Let’s do the chasing for you! 😀

 Here’s what we got for you today:

  • ⏰ Is it time to move your Crypto business to Europe?

  • 🌊 OP Tokens are set to flood the market!

  • 🧱 Around The Block: Bitcoin ordinals surpass 10M inscriptions.

 ⏰ Is It Time to Move Your Crypto Business to Europe?

Regulatory clarity from the US regarding digital assets continues to pose a problem, with many crypto companies seeking solutions elsewhere.

And how are crypto companies dealing with it?

Just recently, Coinbase announced a national ad campaign titled "Moving America Forward" to promote crypto and highlight its potential to update the financial system.

The ad will air during NBA finals, as part of Coinbase's efforts to pressure the United States Securities and Exchange Commission (SEC) for clearer regulations on digital assets.

But just in case, all doesn’t go as planned, they have a backup plan in place.😎

Coinbase also obtained a license in Bermuda in April to operate an offshore exchange.

Unfortunately, not all crypto companies have the financial resources to pull out the big guns.

For those companies, the next best thing is seeking alternatives to the US market while avoiding the offshore label.

And what’s that alternative?

Europe emerges as a potential alternative, and although it doesn't offer a full embrace of crypto nor regulatory freedom, it is still preferable to the uncertainty surrounding cryptocurrency in the United States.

The devil you know is better than the devil you don’t right? 👿

Following the seismic shift caused by Brexit, Europe has focused on technology, including cryptocurrencies and artificial intelligence, as a key aspect of its economic future.

The continent has introduced the “Markets in Crypto-Assets (MiCA)” legislation, which came into effect this year, aiming to regulate the crypto industry.

And European countries, such as France, are positioning themselves to welcome crypto companies under these regulations.

Looks like Europe may be that safe haven that crypto companies need right now. 👼

But while MiCA is a positive step, it still has some limitations.

It took a significant amount of time to be confirmed, making it somewhat outdated by the time it was approved.

For instance, there’s the “Travel Rule” for hosted or custodial wallets, which requires licensing for exchanges and wallet providers.

The “Travel Rule” means they must document the names of senders and recipients who use their wallets, irrespective of transaction size.

If you want crypto asset transactions without this tracking — or want to offer it to your customers — Europe is not the home for you.

However, the wallet restrictions in MiCA only apply to hosted or custodial wallets.

Noncustodial players still have more flexibility in Europe, aligning with the European mindset.

We don’t know about you, but if someone is watching our wallet, they're probably asking themselves what kind of morons would make such moves! 🤣

Oh, and if you're wondering how they will know the wallet that belongs to a particular person?

Here’s how: There is likely a trail back to a custodial wallet like crypto exchanges

And because most of those require KYC (as per EU law), your identity is likely floating out there somewhere even if it hasn't been fully mapped by a government/company yet.

Plus with AI the existing tools to match up 'common' transactions are going to get better.

Monitoring crypto wallets aside, at least the EU has clear regulations even if we don't agree with some of the finer details, that's unlike the SEC which can't make up its mind about what they want to enforce. 🙄

Ultimately, Europe's regulated environment presents a promising landscape for the future of crypto.

So, who's ready to pack their bags and take their business to Europe? 🌍

 🌊 OP Tokens Set to Flood the Market!

Optimism (OP), a layer-2 scaling solution for the Ethereum network, is facing a significant unlocking event on May 31.

More than 386 million OP tokens, valued at $587 million, are scheduled to be released as the initial vesting period for early contributors and investors come to an end.

In case you don’t know: Token unlocks are scheduled events where tokens allocated to early-stage investors and major development contributors are “released” after being frozen for a designated period of time. Crypto projects typically ensure that tokens are “locked up” to avoid large asset sales during periods of low liquidity, an event that could have a significant impact on price.

OP’s unlocking event is one of the largest scheduled for this year and could potentially increase the circulating supply of OP tokens by over 100%.

There are concerns that the unlocking of these tokens could create downward price pressure for the OP token.

According to analysis from Unlock Calendar, a token unlock research firm, early-stage investors, including prominent crypto venture capital firms Paradigm, Andreessen Horowitz (a16z), and IDEO CoLab Ventures, may be tempted to sell their holdings due to substantial returns.

I mean, can you blame them, it's been a tough few months?🤪

Paradigm and IDEO are reportedly experiencing gains of over 10,000% on their initial investment, says data from CryptoRank.

However, on average, the venture capital firms' buy-in price stands at around $0.24, resulting in an aggregate gain of 529%.

Currently, the OP token is trading at $1.51 per token, representing an 8.5% decline in the last 24 hours.

CoinGecko data indicates that the token is down 53% from its all-time high of $3.54, which was reached on February 24 of this year.😔📉

🧱 Around The Block: Bitcoin Ordinals surpass 10M inscriptions.

That's all we've got for you today.

Please don't forget to rate today's email and let us know what you like about it.

In any case, see you tomorrow, or on Twitter, if you're there: @danielakpobare

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.

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