The recent report by CoinShares indicates an existing divergent sentiment aligned to the regional perspective to undertaking crypto investment. The Monday, September 25 publication indicates that the investors hailing from the European Union block portray bullish projections for crypto, unlike their US counterparts.
The CoinShares report indicates that the divergence is evident in European and US investments. The analytic firm’s report attributes the divergence to the contrasting regulatory differences in the two regions.
CoinShares research executive James Butterfill admits that the regulatory crackdown recently deployed by the Securities and Exchange Commission has adversely altered the US investor’s sentiment on crypto. On the contrary, Europe portrays a more constructive sentiment, with the investors’ bullish sentiment fuelled by a well-defined regulatory framework – Markets in Crypto Assets (MiCA).
US Monthly Outflows Dwarfs Withdrawal in EU
A detailed analysis of flow data illustrates that the weak investment sentiment in the US yields a buying opportunity. The weekly analysis shows Europe realized a $16 million inflow into the crypto products, coinciding with the US withdrawing $14 million from the sector.
The CoinShares report captures findings from tracking investment flows extended to regions, countries, and individual assets. The recent report captures flows to crypto-related funds, including Grayscale and ProShares, with similar offerings.
A deeper analysis of the European trends shows Germany realized the largest inflow in the region at $18.1 million. Other countries in the block, such as France and Sweden, registered insignificant flow. Nonetheless, Switzerland suffered the largest outflow from the crypto market at $2.6 million.
Beyond the bullish uptick witnessed last week, European investors still carry a bearish sentiment this month. CoinShares reported monthly outflows approximating $24 million.
Europe’s figure is nearly a third of the high US outflows estimated at $67.5 million in the same period. The findings prompt an inquiry into the factors fueling the recent divergence.
Regulation Framework Influences Investor’s Perspective on Crypto Investment
The CoinShares report projects that the divergent sentiment exhibited by investors in Europe and the US arises from regulatory differences. The report indicates that the European Union saw MiCA enacted over the summer.
The MiCA framework is scheduled for enforcement in December next year. Its implementation will offer clear guidelines for crypto assets. The framework captures a detailed scope of crypto creation, stablecoins, and related services. The Euro Stablecoin Monerium co-founder Jon Egilsson considers MiCA a groundbreaking development that will ultimately influence crypto activity across Europe.
The march towards crypto-specific regulation sets Europe and the United States apart. While the latter portrays regulation through enforcement, the EU has embraced a pro-crypto regulatory framework.
The European continent welcomed the initial exchange-traded fund (ETF) unveiled in August and listed in Amsterdam as Jacobi FT Wilshire Bitcoin ETF. The milestone realized by Europe contrasts the repeated dismissal of applications for spot Bitcoin ETF.
US Struggling with Regulatory Discrepancies and Pending Bitcoin ETFs’ Application
The disappointment prompted Grayscale Investments to file a lawsuit against the SEC’s rejection of converting Bitcoin Trust (GBTC) into a Bitcoin ETF. Grayscale would win over the SEC as the court directed the regulator to reassess the application. The matter is pending alongside other bids by BlackRock, WisdomTree, Wise Origin, VanEck, BlackRock, WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise, Ark Invest, and Valkyrie Digital Assets.
Beyond the US struggle with approving the high-profile ETF applications, Europe is marching ahead. Recently, it welcomed the unveiling of a visa-enabled debit card specific to crypto- Gnosis Pay.
Europe has stayed clear of the struggles delaying the US from realizing crypto benefits. Flowdesk’s legal and compliance executive Anne-Sophie Cissey terms the US regulation as overly complex owing to inherent discrepancies between state and federal laws.
Cissey warns that the divergent sentiment on crypto would extend since the US regulators cannot reach a consensus. The legal expert decries that the SEC only pushes to regulate crypto assets as investment products using the Howey Test.
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