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Institutional Investments, DeFi Make CNWE the Hub of the Cryptocurrency Universe

The Central, Northern, & Western Europe (CNWE) region of the world supports a cryptocurrency economy that has topped $1 trillion in yearly activity, according to a newly minted report from Chainalysis.

The report also points out that the region is responsible for about one-quarter of all global cryptocurrency activity and, as such, has the most of any other geographic area cited in the report.

Interestingly, CNWE was ranked as the second most prolific crypto region in the world last year, but it has since experienced a tremendous surge in activity beginning in July of 2020. That surge, paired with a noteworthy relative decline in crypto activity in Eastern Asia, contributed to the new ranking.

The report points to a number of areas where CNWE transaction growth was notable, but specifically cites Decentralized Finance (DeFi) as a primary driver of economic activity.

According to an explanation from Investopedia, DeFi allows financial products to be made available on a public blockchain network that eliminates the need for “middlemen” like brokerages or banks. As such, one does not need a government-issued ID or proof of address to use DeFi. On those blockchains, lenders, borrowers, sellers and buyers use software to interact either directly or through a “strictly software-based” intermediary.

“An influx of institutional investment, signaled by large transactions, drove most of the growth, though retail activity also increased,” according to the Chainalysis report. “Perhaps most interesting is CNWE’s unique status as an international hub in the world cryptocurrency economy.”

To that end, CNWE is the top trading partner for each of the other regions studied in the analysis. Topping all other regional partnerships, CNWE receives a monstrous 34% of the total transactional value traded out of North America.

From Twitter

Florian Graillot @FGraillot Sep 21

Report Image"Detailed overview of where money was invested in the European #FinTech industry recently, including KPI per sub-vertical (e.g. #InsurTech or #RegTech) and what could happen next. #Money2020 #M2020EU"

Further, the report also points out that “large institutional cryptocurrency transaction value” ballooned from $1.4 billion to $46.3 billion from July 2020 to June 2021. At that level, those institutional transactions represent more than 50% of the total CNWE activity.

“The data shows that over the last 12 months, the majority of large institutional-sized transfers went to DeFi platforms. Given that, it’s not surprising that the majority of those large institutional transfers were made in Ethereum and wrapped Ethereum (wETH), an ERC-20 token of equivalent value to Ethereum commonly used in DeFi protocols,” according to the study.

With respect to the CNWE region, the United Kingdom led all countries in cryptocurrency value received both from DeFi-related activity and overall activity. The report shows the U.K. drove $170 billion worth of activity, with just about half of that running through DeFi protocols. France, with about $120 billion in activity, was the next most prolific country in the region, followed by Germany, the Netherlands and Switzerland.

“Overall … while there are small differences between the individual countries’ exact breakdown of activity, one thing is clear: CNWE has become the world’s biggest cryptocurrency market, and its growth over the last year was largely driven by institutional investors and other whales moving into DeFi,” concludes the report.

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