Manufacturing & Supply Chain

In the first few months of 2021, prominent cryptocurrencies have experienced explosive upward growth. Business Insider remarked in March that “big-name backers” had helped pump the price of bitcoin up to $60,000 (about €50,400), and other cryptos have followed suit. It is of course still popular that the significant growth of recent months is ultimately laying the groundwork for a crash, or at least a significant correction. In the meantime however, the state of cryptocurrency has strengthened to the point that it’s worthwhile to consider what future fintech investment looks like in Europe, for individuals and firms alike.

FinTech Firm Growth

A few years ago we recapped a report from the ESMA concerning the status of licensing regime of FinTech firms in the EU. Said report primarily concluded that innovative, FinTech-related business models were able to operate under existing EU rules. But it also solidified a mandate to “map current authorising and licensing approaches for innovative FinTech models in Europe” moving forward.

This is something to keep an eye on given the expanding strength and influence of cryptocurrencies of late. While past talk of FinTech firm regulation has not solely concerned cryptocurrency-related ventures, it stands to reason that as alternative currencies gain more clout, we will see more FinTech firms in this specific sub-category. These firms will be emerging, growing, and regulating in the coming years, and the rigidity of that regulation will help to determine the broader climate for crypto investment.

Private Investment Education

On the private investment front, Europeans are likely heading toward a potentially problematic conflict between growing interest in crypto trading and less certainty about how to approach the markets. Despite the lucrative trading ranges they’re currently enjoying, individual cryptocurrencies remain unusually volatile. Already, this has led to a great deal of hasty and unprepared personal investment, such that while some make fortunes in cryptocurrency, many experience losses.

This is to some extent a natural consequence of a brand new commodity market emerging so rapidly. However, it is also a problem that is likely to be addressed in the near future through education and simulated trading. FXCM shows that there are already demo accounts that are commonly used to help investors simulate trades in forex, stock, and commodity markets. We would expect to see more individuals pursuing this sort of option for cryptocurrencies as well, so as to gain experience in the market without the risk inherent in actual investing. In time this may lead to more conservative and strategic private crypto investment.

VC Blockchain Investment

Maybe most important of all is the trajectory of blockchain investment in Europe moving forward. Blockchain technology and cryptocurrency are by no means synonymous, nor will investment in one necessarily reflect changes in the other. However, with cryptocurrency undeniably on the rise, it is inevitable that more work will be done in the near future to establish fresh blockchain applications related to cryptocurrency. In theory, any industry or practice that endeavours to accept cryptocurrency for the first time could invest in its own blockchain system in oder to do so. And even this concept only scratches the surface of the blockchain innovation that a more robust crypto ecosystem would spark.

Last year, a post on Medium summarised the state of blockchain investment and revealed that as of 2019, roughly 24% of global blockchain company investment took place in Europe. That percentage came out to some $700 million (~ €588 million). That number will likely be higher in the years ahead.

The very concept of crypto investment is, in the end, a broad and dynamic one. Cryptocurrency is still a very new asset, and blockchain a very new technology. With things accelerating fairly rapidly in these spaces though, the trends and theories above represent some of what we can project regarding the broad crypto investment climate in Europe.

Aimee Price – Web Editor