Why DeFi is popular for institutions in Europe.

xWIN’s sales and marketing team holds meetings with institutional investors and financial institutions around the world on a daily basis. During these interactions, they have noticed a particular trend.

The trend is that institutional investors and financial institutions in Europe and Southeast Asia, especially in Singapore, have shown a high level of interest in DeFi (Decentralized Finance). Here’s a summary of what we’ve heard and researched:

■ Crypto Trading Thrives in Europe:

Central, Northern, and Western Europe boast the world’s largest cryptocurrency economy, accounting for about 25% of global trading volume. While European investors are traditionally considered conservative, countries like Switzerland and the UK have been quick to leverage blockchain technology in finance.

■ Appealing Market for Institutional Investors:

Institutional investors require sufficient liquidity for their investments. Currently, there is an inflow of funds into DeFi, and it has become capable of accommodating institutional investments, depending on the scale. The range of available derivatives has also expanded. Protocols offering cryptocurrency investment trusts, futures, swaps, and options have emerged, providing more investment choices.

■ Low Bank Interest Rates:

One reason why conservative European investors are betting on tokens with high volatility is the low yields in the European banking industry. In Europe, yields from bank deposits are common, and accounts offering higher yields than inflation are considered liquid investments. However, in recent years, obtaining such yields has become challenging. DeFi platforms, on the other hand, have been operating in a way that can offer significantly higher yields than the EU’s inflation rate.

■ Low Resistance to New Technologies:

Europe is historically known for its high inclination towards IT. Consequently, many financial institutions and institutional investors see decentralized finance not as a threat but as an opportunity. Especially in Switzerland, there are various initiatives like tokenization of stocks and in France, tokenization of real estate.

■ Sense of Urgency Due to Small Nation Gatherings:

Countries like Switzerland, Luxembourg, and Finland, which are smaller in size, have a sense of urgency. They are actively incorporating blockchain as a strategy for their survival. xWIN is a member of MAMA, a Swiss blockchain association created to facilitate the fusion of traditional finance and next-generation finance.

We look forward to monitoring developments in the future.