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Europe and the USA benefit from the boom in digital assets



After China practically banned Bitcoin & Co, the cards in the cryptocurrency market are being reshuffled. The USA and Europe are opening up to trading digital assets and can take advantage of the growth in the new asset class. In Germany, too, the transaction volume is rising steadily - not least in the DeFi sector.

2021 was a turbulent year for the still young asset class of digital assets. This was not least due to the strongly fluctuating exchange rates of the largest cryptocurrency: Bitcoin temporarily fell by 50 percent in the summer, only to reach a new all-time high a few months later. Both price movements - the brief crash in the middle of the year and the subsequent bull market in autumn - were also the result of regulatory decisions. Two events are particularly noteworthy: on the one hand the ban on crypto assets in China, on the other hand the opening of the USA and Europe to the trading of digital assets. Both decisions have far-reaching consequences for the global growth of the market.

USA to replace China in crypto mining

News that China would ban digital asset mining caused panic in the markets in June. The reason: Mining is essential for the existence of the Bitcoin network, as miners mine new Bitcoin by providing their computer power and validate transactions on the blockchain. A flourishing market for this in China had developed over the years, with up to 75 percent of global mining activity taking place there. Although the People's Republic had already announced several times in the past that it wanted to ban the trading and mining of cryptocurrencies, the threats usually turned out to be empty words. In June, however, China got serious and imposed a ban on crypto mining, and trading in digital assets was stopped a short time later.

China's decision has far-reaching implications for the global digital asset market. The United States in particular was able to benefit from the ban and fill the vacuum left by China: around a third of mining now takes place in the United States. Kazakhstan and Russia follow at a considerable distance. But not only the shift in the mining rate signals that the USA is increasingly becoming a driving force in the crypto sector. While China is blocking market access to digital assets for investors, the US - but also Europe - are opening their doors even wider.

SEC releases Bitcoin ETFs for the first time

The US Securities and Exchange Commission shows that it no longer sees Bitcoin as a mere gimmick, but as an investment to be taken seriously. Since October, US investors have been able to invest in three different Bitcoin ETFs, which the SEC has now approved after years of postponements. The ETFs are based on futures from the Chicago Mercantile Exchange (CME). So investors do not invest in physical Bitcoin, but in futures contracts that correlate with the price of the crypto-asset. Even if critics complain that the future products are not “real” Bitcoin ETFs: For the first time, the US authority enables an important bridge to the traditional financial world and thus further strengthens trust in the cryptocurrency asset class.

But Bitcoin & Co are also becoming increasingly important outside of the financial markets. For the first time, a “crypto lobby” is being formed on a political level in Washington and is trying to dampen overregulation of the market by the SEC. In addition, crypto assets are becoming more and more mainstream in society. The mayors of the two metropolises of New York and Miami recently announced that they would largely draw their salaries in Bitcoin. Bitcoin has long since overcome the prejudice that cryptos are only used for money laundering and dubious deals.

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