Europe’s Crypto Caution is America’s Gain

Europe’s Crypto Caution is America’s Gain

It was a golden era.

The Soviet Union’s space program was unmatched.

Astronauts were national heroes. Take a look at the beautiful mosaic below. You’ll find it at the last stop on the C-line in Prague’s Háje metro station. It was once famously known as “the station of the cosmonauts.”

Exiting the train, you’ll see a beautiful mosaic called “Kosmonauti.”

Just outside the station stand statues of Czech astronaut Vladimir Remek and Soviet astronaut Aleksei Gubarev. These once proud monuments pay homage to the 1978 Soyuz 28 spaceship mission.

It was a voyage that made Remek the first and only Czech to visit space.

Today, the mosaic is missing a few pieces. And the statue hides forgotten behind some bushes. There’s a McDonald’s near the station and rundown apartments across the street.

There are many monuments like these across Central and Eastern Europe – a reminder of a bygone era when the Soviet Union was on the cutting edge of technology.

As much as I would have loved to continue my treasure hunt and find more of these Soviet relics, that’s not the reason I (Houston) came to Prague.

It was just a short detour on my way to the largest bitcoin conference in Europe, which, just like the old Soviet space program, once had an edge over the United States when it came to crypto regulation.

But that edge, like that old mosaic, is missing a few pieces…

Putting Our Boots on the Ground for You

As regular readers know, you don’t uncover great investment ideas while sitting behind a desk. You have to leap outside your comfort zone and meet with the folks who are changing the world.

That’s why in the past five months, I’ve attended crypto conferences in New York, Toronto, and Las Vegas. Over the last year, I’ve been to eight countries, and I’ll go to 80 more if I need to.

All with a single mission: To find the best ideas I can for my subscribers.

Throughout the North American leg of my tour, I was amazed by the institutional presence at crypto events. I met representatives from major Wall Street banks like Bank of America, Morgan Stanley, and JPMorgan, as well as Big Oil and Silicon Valley.

This was a stark contrast from my first bitcoin conference in Miami Beach back in 2021, when most of the attendees were wearing T-shirts and flip-flops.

A great deal of the mass adoption we see underway today in crypto is due to a friendlier regulatory environment in the United States.

As Daily editor Teeka Tiwari predicted back in October 2024, the reelection of President Trump – who ran as the most pro-crypto candidate in history – triggered a rally in bitcoin. Since then, it’s been up as much as 61%. By comparison, the S&P 500 is up 8%.

But the United States is only one slice of the pie.

Digital assets are borderless and global. And I wanted to know what industry insiders are seeing on the other side of the Atlantic.

That’s why I booked a flight to Prague to attend Europe’s largest bitcoin conference.

Europe is Stumbling – Badly

Like the Soviet Union, which briefly held a technological edge over the United States during the Space Race… For a time, Europe briefly held an edge over the U.S. when it came to friendlier crypto regulation.

Under the Biden administration, the U.S. Securities and Exchange Commission (SEC) cracked down on the industry, filing lawsuits against major players like Binance and Coinbase, and harassing smaller projects, which fled overseas to friendlier jurisdictions.

While the U.S. crypto industry faced heightened scrutiny under the SEC… In April 2023, the European Union (EU) adopted the Markets in Crypto Assets Regulation (MiCA). It’s a comprehensive framework that provides greater legal clarity in that region.

We all had high hopes for MiCA. But instead of fostering innovation, it's being used to stifle innovation.

I spoke with many European crypto project founders and investors while in Prague, and they all echoed the same concerns about regulation: Things are going backwards. Regulators are weaponizing MiCA.

Here’s what one of the founders of a lending protocol told me, which summed up everyone’s feelings best:

The European insiders I talked to asked for anonymity so they could speak freely. They’re afraid regulators may come after them. And they’d rather build in the shadows until the situation improves.

That sense of uncertainty was reflected at the bitcoin conference in Prague. As another project founder told me, while this year’s event had higher attendance, there were fewer booths compared to last year, something I witnessed firsthand.

You can see how sparse the exhibitor hall was in the picture I snapped below.

Project teams showed up, but the space was pretty open. In the eyes of regulators, having a booth means you’re selling a service or product. And that puts a target on your back.

Look, I’m no expert in EU politics. So I don’t know why regulators there are reversing course and cracking down on the industry.

But just like we’ve seen in the U.S., I believe EU regulators will eventually cave to financial institutions. The opportunity to rake in billions in profits is too big to pass up.

Remember, Wall Street giants like JPMorgan Chase, Morgan Stanley, and BlackRock all opposed crypto at first… Only to change their tune and completely throw their support behind this asset class when they saw the mountain of dollars they could make.

While 95% of EU banks haven’t touched crypto, we are beginning to see a few European heavyweights begin to get their feet wet.

These are just a few examples. But as you can see, these are small, timid moves. They’re reminiscent of moves U.S. banks were making four years ago.

So while it’s slow going in Europe, the economic incentives that drove American banks into crypto will surely do the same for European banks.

And when they do, a tsunami of capital will flood into the crypto markets, just like we’ve seen with American capital over the last 18 months.

Remember, bitcoin was sitting at just $25,000 when the largest asset manager in the world, BlackRock, filed for a spot bitcoin exchange-traded fund (ETF) in June 2023.

The arrival of U.S. institutions has helped propel bitcoin 350% higher in just 18 months of the first ETF approval.

That is a staggering return.

Since their launch in January 2024, spot bitcoin ETFs have amassed over $50 billion in net inflows… And they show no signs of slowing down. Last month alone, spot bitcoin ETFs vacuumed up $4.6 billion in net inflows.

I believe we’ll see something similar once the EU breaks down its barriers.

$33 Trillion Sitting on the Sidelines

According to financial magazine Funds Europe, there’s over $33 trillion in assets under management on the continent. And according to Reuters, less than 1% of it is in crypto.

If just 1.5% of these European assets flow into bitcoin, that’d be nearly $500 billion in inflows.

Think about it… $50 billion in spot bitcoin ETF inflows over the past 18 months has pumped bitcoin’s price from $25,000 to over $112,000… Imagine what 10x that amount can do.

It’s unfortunate the builders, founders, and investors I spoke to feel like EU regulators are reversing course. But what I see is untapped potential.

There is trillions of dollars’ worth of liquidity in Europe just waiting to flood the crypto market. EU regulators, like their U.S. counterparts, can only hold back the tide for so long before the dam bursts.

It might take a few months or a year, but I’m certain Europe will come around. There’s too much money at stake not to.

The big money managers in Europe aren’t stupid. They see the opportunity they’re missing out on. It won’t be long before they pressure regulators to open the pathways to mass adoption – just like BlackRock did in the United States.

In the meantime, Europe’s fumbling approach to crypto is a huge gift to everyday investors like you and I. Every day they suck their thumb on crypto gives us the opportunity to stack more sats on the cheap.

Teeka believes bitcoin will be $1 million per coin by the end of this decade. That means every day the Europeans procrastinate is an extra day we get to buy bitcoin on the cheap.

We’ve seen this movie before. We know they will all come into BTC and crypto. And they will pay much higher prices. Just like the American bankers had to, while our subscribers were buying in at prices as low as $400 per coin.

Keep Stacking Bitcoin!

Houston Molnar

P.S. The liquidity I mentioned above won’t flow indiscriminately into just any crypto projects.

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