Executive Summary

Europe’s thriving Cryptocurrency market ranks second globally, with rising adoption and new financial instruments poised to attract even more traders.

  • Europe is the second-largest cryptocurrency economy in the world, accounting for 17.6% of global transaction volume.

  • European investors have become a leading force in the innovative Crypto market, with adoption in the eurozone expected to continue at pace.

  • The launch of cash-settled Micro Euro-denominated Bitcoin and Ether futures contracts, coming March 18, will help accelerate the ongoing institutionalization of the European Crypto market.

European investors have become a leading force in the crypto world, with their fervor expected to keep pace this year and beyond as bitcoin scales to historic highs.

Central, Northern and Western Europe (CNWE) is the second-largest cryptocurrency economy in the world, behind North America. The region accounted for 17.6% of global transaction volume between July 2022 and June 2023, according to a report by Chainalysis.[1]


There are five major factors behind Europeans embrace of crypto currencies:

1. Growth in European Crypto market as a consequence of various shutdowns

With the crypto clampdowns in Asia, the digital asset drama in 2022 and continuing regulatory sanctions of the U.S., European Crypto markets flew largely under the radar.

The euro is the second highest traded fiat currency for spot crypto transactions after the U.S. dollar (USD), with growing liquidity. The transaction volume in Europe has mostly been driven by the decline in trading activity in Asia, where countries like China have banned crypto trading and mining while other regions have various forms of restrictions. There is also tremendous activity in decentralized finance (DeFi) coming out of Europe that essentially bypasses third parties and institutions from financial transactions.

The growth is also driven by institutional inflows. Year-to-date, 24% of Bitcoin and Ether futures volume at CME Group has been transacted from the EMEA region.

Euro-denominated cryptocurrencies are the second most popular fiat behind USD. Given the recent volatility in the euro FX markets, and recent USD/EUR parity, accessing BTCUSD-based spot markets is more expensive for euro-funded or euro-income based investors.

The March 18 launch of cash-settled, regulated, Micro Bitcoin Euro and Micro Ether Euro futures contracts is expected to help accelerate the participation of institutional investors in the European Crypto market. The contracts, sized at 0.1 bitcoin and 0.1 ether, will provide clients with more precise tools to trade and hedge their crypto portfolios or express a view on potential market moves more efficiently.  The Euro-denominated contracts will also be euro margined.

These new contracts bring CME Group’s regionalized risk management products for regional markets to crypto in a meaningful way, with the potential of allowing arbitrage opportunities across the different fiat-denominated Cryptocurrency contracts or the creation of a synthetic FX rate. Capital efficiencies through potential margin offsets available with Bitcoin futures and options, Ether futures and options, and the USD-denominated Micro Bitcoin and Ether futures, may also be realized.

2. Liquidity at the heart of investments

For an asset to be investable by institutions, it needs to have sufficient liquidity. European institutions have access to exchanges that offer a much broader range of crypto ETFs, Exchange-Traded Notes (ETN), funds, derivatives, perpetual contracts and a maturing array of platforms on which to transact for quite some time.

Reliable onramps have notably improved over the past few years, as a handful of European exchanges have raised significant funding rounds and global exchanges have expanded their European presence.

What is missing is a center for futures price discovery and a EUR liquidity pool that will allow more closely aligned risk offsets with the current range of European funds, ETFs and perpetuals.

3. Regulation

In June 2023, the European Union approved the Markets in Crypto-Assets (MiCA) Regulation, putting in place a unified approach toward regulating crypto activities in all EU countries. MiCA’s provisions will take effect starting from mid-2024.

4. Yield through DeFi

Across the region, DeFi is the most popular service category, accounting for 54.8% of cryptocurrency value received. DeFi has played a key role in CNWE’s crypto adoption over the past few years, most notably with decentralized exchanges (DEXes).

Why are European investors banking on DeFi?

The answer can be summed up in two words that characterize the European banking landscape: yield and technology.

Europeans are accustomed to receiving interest payments on their bank deposits and typically consider an account offering a rate higher than inflation as a valuable investment option. However, with interest rates hovering near zero or even dipping into negative territory in recent years, institutions have been compelled to seek yield elsewhere, and as such there is a growing recognition that yield must be sought in technological ventures, with decentralised finance platforms emerging as alternative avenues.

These evolving dynamics are driving crypto assets closer to integration with traditional financial systems, opening up new avenues for yield generation for both investors and entrepreneurs. The recent performance of crypto markets, coupled with in depth analysis of investment trends, underscores a robust demand for such assets. The resulting wave of innovation meets this demand and may end up benefiting market participants of all types.

5. Technological advancements

European financial institutions are avid adopters of technical advancements, a tendency stemming from their historical emphasis on IT infrastructure, surpassing that of U.S banks. This inclination has been driven by the need to remain competitive compared to their U.S. counterparts.

Innovation has been pivotal in propelling the recent expansion of the banking sector, to the extent that many Europeans cannot recall the last time they used a paper check.

Consequently, financial institutions view decentralized finance not as a threat but as a promising opportunity. Several prominent stock exchanges are already setting up for the convergence of traditional and crypto asset trading. Many banks are looking into both centralized and decentralized blockchain-based applications and have intentions to offer crypto trading, a process that is likely to accelerate as their institutional clients become more active in the field.

Gain exposure to Euro-denominated Crypto Futures

As growth in the eurozone continues at pace, the importance of regionalized risk management tools for regional markets grows further. 

The euro-denominated,  euro-margined, cash-settled futures will provide clients additional tools to hedge exposure to bitcoin and ether, the two largest cryptocurrencies by market cap. The two new contracts will round out the euro-denominated offering, joining their larger-sized counterparts launched in June 2022.

Designed to match their U.S. dollar-denominated counterparts, Micro Bitcoin Euro and Micro Ether Euro futures contracts will be sized at one-tenth of their respective underlying cryptocurrencies.

The final settlement value of the futures contracts is the price of the CME CF Bitcoin-Euro Reference Rate and CME CF Ether-Euro Reference Rate on the expiration day of the futures contract. The rates are calculated using aggregated executed trade flow of bitcoin-euro and ether-euro transactions on four major crypto spot exchanges during an explicit calculation window – 3:00 to 4:00 p.m. London time and are published at 4:00 p.m. London time. Calculation rules are geared towards maximum transparency and replicability in the underlying spot markets.

The Euro Reference Rates only includes trades executed between BTC and EUR or ETH and EUR. They do not use alternate currency pairs or crypto to crypto trading, nor apply FX conversion calculations.

[1] https://go.chainalysis.com/rs/503-FAP-074/images/The%202023%20Geography%20of%20Cryptocurrency%20Report.pdf?version=0

All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

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