Amid a regulatory crackdown in the United States, billionaire Mike Novogratz's cryptocurrency group, Galaxy Digital, is expanding into Europe, seeking to establish a strong presence in the region, according to Financial Times. Leon Marshall, Galaxy's first head of Europe, says one key motivator for this expansion is the progress that's been made in Europe in developing legal frameworks for trading digital assets.
The European Union passed the Mica crypto regulation, which is designed to provide regulatory guidelines and investor protection for the crypto industry. Additionally, the UK, under Prime Minister Rishi Sunak, is actively competing to become a cryptocurrency hub. The Financial Times notes this expansion into Europe stands in strong contrast to the US, where crypto regulations are fragmented, and regulators have taken a more aggressive stance, filing charges against major exchanges like Binance and Coinbase. The favorable regulatory environment in Europe, combined with strong market demand, makes it an attractive destination for cryptocurrency firms, according to Marshall.
Galaxy Digital, based in New York, offers a range of crypto services, including trading, lending, and asset management. The Financial Times reports that the company faced challenges during the recent market downturn, recording a $555 million loss in the second quarter of the previous year due to the collapse of the stablecoin Terra and its sister token Luna.
However, Galaxy sees an opportunity in the current crypto landscape, as many competitors have exited the market or cut costs aggressively. Marshall intends to hire staff across various business segments within Galaxy, including investment banking, asset management, crypto lending, and derivatives, according to The Financial Times.
After the SEC filed lawsuits against Binance in June, the largest crypto exchange in the world, and Coinbase, the largest crypto exchange in the U.S., for allegedly violating securities laws, the CEOs of both companies responded to the lawsuits with statements emphasizing the lack of regulatory clarity for crypto companies in the U.S., as Federal Newswire previously reported.
During a fireside chat earlier this month, Binance CEO CZ praised Europe’s proposed Market in Crypto Assets (MiCA) regulatory framework, which would enable crypto companies to obtain a single license to operate across 27 jurisdictions within the European Union, as reported by Globe Banner. He called the framework “fantastic” and suggested that it could serve as a model for other regulators across the globe.
Galaxy Digital's expansion into Europe aligns with a broader trend of cryptocurrency and blockchain firms seeking opportunities and more favorable regulatory environments in regions outside of the United States. Notably, venture capital firm Andreessen Horowitz recently opened its first office outside the US in the UK, focusing on crypto and blockchain investments, which has received support from the UK government. Galaxy Digital's partnership with German asset manager DWS to offer crypto exchange-traded products also indicates their commitment to expanding their presence in the European market, The Financial Times Reported.