Bitcoin adoption in the European Union is being hindered by a "fragmented" regulatory landscape, according to analysts.
Europe’s institutional environment is more divided compared to the US, with regulatory hurdles and conservative investment mandates limiting Bitcoin allocations.
European pension funds and large asset managers have been particularly slow to adopt Bitcoin due to unclear guidelines and risk aversion.
Additionally, retail investor participation in Europe is generally lower than in the US, partly because the region is more conservative in adopting new financial instruments.
This contrasts with the US, where a deep, liquid, and relatively unified capital market has facilitated the rollout of Bitcoin ETFs, driven by strong retail demand and clear regulatory approval.
Despite these challenges, the recent launch of a Bitcoin exchange-traded product (ETP) in Europe on March 25 could boost institutional confidence among European investors.
However, the smaller liquidity pool for Bitcoin in Europe compared to the US further complicates large-scale transactions, deterring institutional investors and corporations from entering the market.
Addressing these issues will require EU policymakers to create a more cohesive and supportive regulatory environment for Bitcoin and other cryptocurrencies.
EU and US regulatory frameworks differ significantly across various domains due to their distinct political structures, legal systems, and approaches to governance.
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