Just How Did Europe Outshine US and Asia in Token Sales for 2018?

by David Drake

Note: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.

As the rest of the world battles with regulations and government lockdowns, Europe is surging past its major competitors in the US and Asia, according to a report published by Fabric Ventures.

The continent has successfully launched Initial Coin Offerings (ICOs) valued at $4.1 billion this year alone, which is almost the sum total of its biggest rivals both in the US where $2.6 billion was raised, and Asia, which rounded off at $2.3 billion.

2017 was a slow year for ICOs on the continent, but between December 2017 and February 2018, when the cryptocurrency market was labeled bullish, token sales soared. Sales have since leveled off, reaching an all-time low in September following a warning by the International Monetary Fund (IMF).

European leaders
So far this year, Malta and Gibraltar, two small European countries, have raked in over $300 million in ICO sales. Other larger economies that have have displayed incredible statistics include the UK that raised approximately $490 million, Switzerland which grossed $556 million and Lithuania in third place having raised $271 million. Cumulatively, these sales have already surpassed the amount raised through ICOs in the US in 2018, three months before the close of the year. The report highlighted figures for the first nine months of 2018.

France and Switzerland have already welcomed the cryptocurrency rush, with the France economy minister, Bruno Le Maire hinting at ambitions of becoming a major hub for digital assets. The UK has also launched a crypto assets task force with the aim of making their own rules to govern blockchain and cryptocurrencies operations in its jurisdiction.

Europe has been able to dominate the digital space because it has more developers compared to the US. Whereas Europe has over 5.5 million developers, the US falls short by about 1 million, with a mere 4.4 million. Also, Europe boasts of having more STEM graduates than the US, an aspect that gives its technical talent a significant boost.

Prior to the 2008 financial crisis, this pool of students traditionally flocked the banks or migrated to the US in search of venture capital. With the digital wave pushing forward, there has been little need to cross borders. The continent has flourished at a time when China and India have completely stifled cryptocurrency usage and the US bogged down by strict regulatory restrictions. European countries, which function independently of each other, have much friendlier regulatory governance.

Why the surge?
European countries offer friendlier regulations to cryptocurrency firms compared to their counterparts in Asia and US. For Qupon founder and CEO, Joseph Oreste, investors in both US and Europe see the value and the future that cryptocurrency and decentralized technology have. However, he attributes the surge of ICOs in Europe to the lower regulatory burden for investors in Europe compared to Asia and the US.

Asian countries such as Singapore and Hong Kong, are strung on the coining of this new financial asset. By labelling cryptocurrencies as security products, these countries subject digital assets to harsher securities laws.

On the contrary, the non-restrictive regulatory environment within Europe provides a hotbed for token investments. With the support that European governments have shown towards digital assets, risky investors and those just wanting to get a ‘piece of the pie’ in the US and Asia might opt to invest in Europe.

In the US, large scale investors such as hedge funds and pension funds are still reluctant to dive into the cryptocurrency pool until regulations secure the path forward. It is yet to be seen what the Securities and Exchange Commission (SEC) and other governing bodies will come up with to safeguard digital assets. But with top companies, such as Fidelity Investments stepping into the market with real solutions, cryptocurrencies could finally be getting some teeth.