Europe offers bitcoin friendly environment

A latest article by Chris Grundy, a self-confessed bitcoin enthusiast, titled "Why the future of Bitcoin lies in Europe", describes that while bitcoin regulation in the U.S. remains unfriendly, Europe provides an excellent opportunity.

He begins by acknowledging that innovation represents disruption and that bitcoin is an important innovation that needs progressive legislation to unlock its full potential.

Bringing attention to bitcoin regulation in the U.S., he pointed out that the 8th August deadline for BitLicence applications saw 22 applications (confirmed so far) and 15 bitcoin companies ceasing their operations in New York State. What's interesting is that some companies like ShapeShift and Xapo, relocated their headquarters from the U.S. to Europe following the legislation.

Also, the California Virtual Currency Act, AB 1326, would result in a $5,000 non-refundable registration fee for any digital currency business. This bill comes with no guarantees, from banks or legislators.

Alena Vranova, co-founder of SatoshiLabs, and creator of the Trezor bitcoin wallet, said, "The barrier of entry for newcomers to financial services is too high."

The US's resilience to progressive bitcoin legislation is baffling, taking into account the tax and revenue implications. Although nearly 77 percent of all bitcoin currency conversions are denominated in US dollar, yet the US does not officially consider bitcoin as a currency.

On the other hand, Europe has been instrumental in shaping bitcoin, Grundy added. Henrik Hjelte, co-founder of ChromaWay, a Stockholm-based open-source coloured coins wallet, explained his company was close to moving to the US around a year ago. However, the thought of expensive legal bills "scared" the team, so it decided to settle in Europe instead. "So far we have not regretted it," he added.

Bitstamp, which comes from the first generation of bitcoin exchanges, has fully enforced KYC processes and implemented hot wallet multisig technology. Kaja Ribnikar, executive assistant at Bitstamp, said her company has had positive experiences with European regulators, adding:

"It goes without saying that they are open for dialogue, they are receptive and have a more balanced view on bitcoin. It is evident that the US is a much tougher environment to run a bitcoin business."

Ribnikar said that regulators in Europe have realised that clamping down on bitcoin would mean "killing a very powerful and productive ecosystem".  

Many entrepreneurs suggest that the unmatched level of venture capital available in the US, act as a palliative for the unfriendly legislation. As Meinhard Benn, CEO of SatoshiPay, has stated, however, US legislation "gives advantage to well-funded companies, which in turn dampens innovation".

In conclusion Grundy said, "What we should take away from this is that progressive legislation can open the door to innovation. By providing a legal framework, many European countries are giving bitcoin entrepreneurs the confidence they need to create and find new use cases for bitcoin and the blockchain."