Laurent Benayoun, the CEO of Acheron Trading, has shared key crypto industry insights focused on the European digital assets ecosystem.
Benayoun joined the firm following the acquisition of HedgeTech, the trading algorithms and infrastructure provider he co-founded.
Passionate about algorithmic trading strategies and market microstructure, Benayoun also serves as a peer reviewer for the Journal of Quantitative Finance, as an expert for Alumni Ventures, as an interviewer for the Master of Finance at Princeton, and as a mentor for the Harvard Blockchain Incubator. Laurent holds a Master’s degree in Financial Mathematics/Engineering from Princeton University.
Our chat with Laurent Benayoun is shared below.
Crowdfund Insider: What is the current state of digital assets in Europe, and how has it evolved over the past couple of years?
Laurent Benayoun: The trajectory of the European digital assets market has been positive, providing a promising outlook for the future. Indeed, the digital asset industry saw impressive growth in 2023, by the end of which the region became the global leader in crypto employment creation.
Europe also accounted for 17.6% of global transaction volume in 2023, placing it as the second-largest digital asset economy in the world by the end of that year as well.
This year, metrics provide just as promising an outlook, building on the growth achieved in 2023. Trading volumes in the region are projected to reach $40.5 trillion by EOY and Europe is projected to account for 37% of global crypto transaction value this year, effectively placing it as the leading region in that regard.
Looking beyond this year, the market is expected to record a CAGR of 8.6% from 2024-28, reaching a projected total amount of €26.7bn by 2028. These projections paint an increasingly clear picture: Europe is attracting projects, investors, and activity, positioning the region as a global leader in digital assets. Given the events of 2022 and the fear that the industry would never recover, this past, current, and expected future growth are all the more impressive.
Crowdfund Insider: How did the events of 2022 impact the European digital assets market specifically?
Laurent Benayoun: The collapses of industry titans such as FTX, Terra/Luna, Celsius, and 3AC in 2022 were considered by many to be catastrophic for the future of digital assets around the world. Their impacts were felt globally, though each market was affected quite differently.
The European digital asset market withstood those events relatively well compared to its counterparts in other regions, notably the US. Despite €1.26 trillion in market capitalization vanishing, the Federal Reserve’s rate increases, and the massive selloffs that ensued, European investors remained somewhat protected from the damage.
This was likely because most of the transactions took place outside of the region, even though 55% of global trading volume occurs on European-licensed exchanges, as reported by the European Securities and Market Authority earlier this year.
Crowdfund Insider: What impact has the MiCA framework had on its growth, and what influence will it continue to have?
Laurent Benayoun: As has been said time and time again, one of the largest barriers to market growth has been the lack of regulatory clarity and certainty, globally. It comes as no surprise then that the establishment of the MiCA framework, which addresses both friction points, has given projects and companies in the industry the confidence they need to operate in the region.
Beyond encouraging the establishment of operations for crypto companies in the region, the presence of clearer guidelines has impacted adoption on behalf of financial institutions in the region. The Landesbank Baden-Württemberg, Germany’s largest federal bank; Deutsche Bank; Sygnum; and DZ Bank; among others, have begun making their entry into the digital assets industry this year.
From a market maker’s perspective, the MiCA framework has been critical to continuing operations in Europe and servicing European clients. Given the vital role of market makers in bringing much-needed liquidity to the market, the presence of clear guidelines will ultimately fuel market activity, efficiency, and growth.
Crowdfund Insider: What are some of the most significant factors set to influence liquidity in the European digital assets market in the months ahead?
Laurent Benayoun: Among the typical factors influencing market liquidity, there are upcoming decisions and considerations that may have an important impact. One of those is ESMA’s question in its recent call for evidence on whether to include crypto ETFs in UCITS for retail investors.
That paper, in and of itself, also references MiCA and whether or not that might impact market liquidity. As it continues to be implemented across various jurisdictions and enables projects to remain active, MiCA also stands to impact market liquidity.
Finally, there have been many discussions about how upcoming elections across EU countries might impact the market, depending on their outcomes. What this really shows is that macro events across the region can have an impact on confidence, activity and therefore, liquidity. However, the ability of market makers to service the European market, thanks to the frameworks in place, will help maintain market efficiency.
Crowdfund Insider: Is Europe poised to become a leader in digital assets adoption?
Laurent Benayoun: In many ways, it already is. Europe has been leading the charge in driving market growth and establishing regulatory guidelines, offering reassurance and confidence to companies and investors in the region. Europe typically outnumbers other regions in terms of recommended countries for establishing digital asset projects because of the favorable conditions and infrastructure they provide them with, fostering innovation and stable growth.
Furthermore, the past year alone has seen many major indicators of adoption in Europe, such as Stripe enabling crypto payments for EU clients and crypto index fund manager Bitwise entering the European market. As more major, trusted companies and projects with a strong user base and reputation to back them enter the market and attract new users, adoption will only increase.
Continued growth in this regard hinges on the further implementation of MiCA across various jurisdictions. Some projects more than others will have work to do to ensure they are appropriately meeting the guidelines established, which may see some variations in different countries within the region. Challenges must be met with fair and equitable solutions to prevent projects from abandoning efforts to establish themselves in the region.
All in all, Europe can already be considered a leader in adoption. The MiCA framework and its impact on financial institutions entering Web3 or existing companies expanding their operations to Europe is proof that it is leading the charge in many respects. Hopefully, others will follow in the region’s footsteps so that digital assets can finally become what they were meant to be: the future of finance.
