On a global level, around 16% of the population owns cryptocurrency, and currently, about 15% of the US population has invested in crypto. Turkey, India, Vietnam, and Nigeria have the highest affinity for crypto. The Chainalysis 2023 Global Crypto Adoption Index shows that 8 out of the top 20 countries with the highest crypto adoption rates are developing countries in Central Asia, South Asia, and Oceania. So, what's the story behind this data?
I would say that Swedes, Danes, and Norwegians have a cultural ethos steeped in pragmatism and skepticism. Generations have leaned on traditional financial systems and have found comfort in the stability that they offer. They respect conventional banking, and its structure is a part of the broader societal fabric of these nations. Being Swedish myself, I feel that a large part of the population in these countries finds a sense of security and predictability in the traditional financial system. In the face of cryptocurrency's notorious volatility, I certainly understand why there’s caution and skepticism.
Central to Scandinavian skepticism towards cryptocurrencies lies an unwavering trust in established financial institutions, even if they are far from perfect. But we must acknowledge that these nations have long benefited from robust banking systems and regulatory frameworks, fostering a sense of security and confidence among citizens. Let’s be clear: unlike the decentralized nature of cryptocurrencies, traditional banking offers oversight of financial markets, clearer assurances, and safeguards. This inherent trust in institutionalized finance serves as a barrier to widespread adoption of cryptocurrencies among Swedes, Danes, and Norwegians.
“Oops, my crypto was stolen!” Crypto exchange crashes, security breaches, and historic levels of fraud within the crypto sphere undoubtedly reinforce the preference for regulated and secure financial channels. It’s worth noting that all nascent technologies of this magnitude undergo teething problems before broader societal acceptance. Industrial revolutions are, after all, processes.
What's the solution?
I see the potential of the Markets in Crypto-Assets (MiCA) regulation in increasing institutional trust in crypto. That’s where we must start. The Markets in Crypto-Assets (MiCA) initiative seeks to establish a unified regulatory framework for crypto-assets, thereby improving transparency and enhancing consumer protection. In short, MiCA is about to go fully live late 2024 and it aims to instill greater trust among institutional investors.
I believe in a hybrid solution where traditional finance and crypto coexist, and for that, we need a cohesive framework.
I think that MiCA will trigger an increase in institutional investment in the EU crypto market by reducing regulatory ambiguities and creating a more regulated, standardized environment.
Here’s some insider buzz: Major European banks are poised to offer crypto-related services like custody, exchange, and stablecoin issuance within the next few years. I think this is when crypto investing gets the standardization that most Scandinavians need.