Western European traders are found to prefer centralized exchanges over decentralized ones as CEX traffic outpaces DEXs by a factor of ten.
The number of daily active crypto traders in Western Europe fluctuates between 1.2 million and 1.5 million, according to a report published by Bitget Research, the analytical division of the global cryptocurrency exchange.
According to the report, Germany and France are at the forefront of this activity, with Austria recording a staggering 70% growth in crypto trader numbers from December 2022 to December 2023, indicating a vibrant and expanding market.
P2P trading is unpopular in Western Europe
The in-depth study reveals that the region is marked by significant trading volumes, a strong presence of DeFi (Decentralized Finance) activities, a regulated environment, and a comparatively lower inclination towards P2P (Peer-to-Peer) trading platforms.
The paper further indicates that Western Europeans’ approach to cryptocurrency investments sees them engaging in both contracts and spot trading, with a strong inclination towards mainstream assets, but also involvement in decentralized projects, NFTs (Non-Fungible Tokens), and Web3 platforms.
P2P trading volumes, however, remain significantly lower than other forms of cryptocurrency transactions. Bitget Research attributes this to the prevalent method of acquiring digital assets through fiat deposits or card-linked purchases, contrasting with regions like South East Asia where P2P trading is more common.
Western European traders are found to prefer centralized exchanges over decentralized ones as CEX traffic outpaces DEXs by a factor of ten. Among decentralized platforms, PancakeSwap and Uniswap emerge as favorites, with Coinbase Wallet, Metamask, Bitget Wallet, and TrustWallet being the go-to wallets across the region.
The report concluded by predicting a rising interest in on-chain solutions, particularly NFTs, DEXes, and blockchain games, with the expectation that one to two blockchain projects led by Western European teams will emerge as leaders in their respective sectors.
IOSCO warns of misconceptions surrounding decentralization of DeFi
The International Organization of Securities Commissions (IOSCO), the global standard setter for securities markets, recently released nine policy recommendations for consultation, aimed at addressing market integrity and investor protection concerns within the DeFi space.
These recommendations cover six key areas, aligning with the IOSCO Objectives and Principles for Securities Regulation, along with relevant supporting standards, recommendations, and best practices. The areas of focus are as follows:
Understanding DeFi Arrangements and Structures: Establishing a clear understanding of the diverse range of DeFi structures and their implications.
Achieving Common Standards of Regulatory Outcomes: Ensuring that regulatory outcomes are consistent and harmonized across different jurisdictions.
Identification and Management of Key Risks: Identifying and mitigating the significant risks associated with DeFi.
Clear, Accurate and Comprehensive Disclosures: Promoting transparency through clear and comprehensive disclosures.
Enforcement of Applicable Laws: Ensuring that DeFi platforms and participants adhere to relevant laws and regulations.
Cross-Border Cooperation: Encouraging collaboration among regulatory authorities across borders to address global DeFi challenges.
One crucial aspect highlighted by IOSCO is the misconception surrounding the decentralization of DeFi. Despite the autonomy associated with DeFi protocols and smart contracts, “responsible persons” can be identified. These individuals, whether legal entities or natural persons, are seen as key actors who should bear responsibility for upholding investor protection and market integrity.
Tuang Lee Lim, Chair of IOSCO’s Board-Level Fintech Task Force, commented: “Our recommendations are therefore predicated on the need to identify these persons, whether legal or natural, who should bear responsibility for upholding investor protection and market integrity.”
IOSCO has opened the recommendations for public consultation, seeking input from industry stakeholders and experts. The organization aims to finalize the DeFi recommendations by the end of 2023, in line with its Crypto-Asset Roadmap established in July 2022. This effort is intended to work in conjunction with IOSCO’s existing recommendations for Crypto and Digital Assets (CDA).
As the DeFi landscape continues to evolve and gain prominence in the financial world, regulatory initiatives like these from IOSCO are crucial in providing clarity, consistency, and investor protection within the decentralized finance ecosystem.
