Luxembourg/Germany: “People are ready to pay for cryptocurrencies”

Marrying the highly regulated world of stock exchanges with sulphurous cryptocurrencies: already a pioneer in Europe, the Stuttgart financial center is banking on Donald Trump’s second presidency to consolidate its lead. Matthias Voelkel, chairman of the board of Börse Stuttgart, the sixth largest stock exchange group in Europe, is already rubbing his hands: “The election of Trump and his desire to propel the United States as the ‘Bitcoin Nation’ is expanding the market” of all cryptoassets, he assuresAFP. Cryptoassets, commonly called cryptocurrencies, remain the subject of numerous controversies, between their extreme volatility and their fraudulent use by cybercriminals.

But this sulphurous reputation did not prevent the financial group from southern Germany from building in the space of five years, according to its statements, “the largest trading activity in cryptocurrencies” among the European stock exchanges. The company almost tripled the volume of crypto asset transactions last year, which represented approximately “25% of [ses] revenue”, and bitcoin, the most important of them in the world, totals “nearly 50% of this activity”, affirms Mr. Voelkel, without revealing an amount. The volume of cryptoassets held by the Stock Exchange reaches around 4.3 billion euros.

A challenge given that these digital assets were originally designed to do without institutional intermediaries and facilitate direct payments between individuals, thanks to a decentralized technology (the blockchain, or “blockchain”) which records transactions using to a network of computers around the world.

But throughout Europe, individual customers and businesses are looking for secure ways to enter the cryptoasset market and for some, it is more secure to use a bank or a stock exchange. This is the audience that Börse Stuttgart is targeting: the group claims more than a million cryptocurrency users mainly in Germany, Austria and Switzerland, targeting both professionals and individuals. Matthias Voelkel invested in bitcoin, convinced by the secure and tamper-proof technology that supports it.

Certainly, cryptocurrencies “have no value of their own,” recalls Gilbert Fridgen, professor at the University of Luxembourg. But “people are willing to pay for them” because they “have confidence in the fact that a bitcoin that has value today will also have value tomorrow.” At the beginning of December, Donald Trump took credit for bitcoin crossing the $100,000 mark. Its price was still hovering around $69,000 on November 5, the day of his election. Once-skeptical banks are starting to seize these opportunities, as are European investors, around 10% of whom already own digital assets, according to the European Central Bank.

On the stock market side, the movement is still cautious: in Germany, the leader Deutsche Börse, which manages the Frankfurt market, launched last year a regulated trading platform dedicated to this sector. The operator Euronext, which notably manages the Paris stock market, does not offer a direct platform for cryptoassets, but allows investment in financial products linked to digital assets listed on its markets. Much larger in size, international platforms like Binance, or Coinbase, based in San Francisco, offer protection to users which can vary depending on the country. One of them, FTX, went bankrupt in 2022.

As more and more players in the traditional financial world move into cryptoassets, Mr. Voelkel hopes that Börse Stuttgart can be a “partner for European banks and financial institutions that offer cryptocurrency services to their customers” . The American deregulation of the sector, announced by Trump, will not necessarily encourage players to move their activities there, “because the European market benefits from positive dynamics”, believes Mr. Voelkel. Europe, with the adoption of the MiCA regulation in 2023, which governs the trading of cryptoassets, favors a secure framework.

“We do well to continue to enable cryptocurrency trading in a well-regulated environment,” says Fridgen. Thus, “clients will continue to want to invest in Europe, and for this, we need European platforms which, of course, will also benefit from such growth,” he concludes.

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