European Web3 Landscape Faces Regulatory Challenges

The report titled Web3 & Crypto in France and Europe highlights a shift in the digital assets sector. Published by Adan, Deloitte, and Ipsos, it emphasizes increasing regulatory demands and shrinking venture capital, influencing current trends.

The report involved interviews with 82 Web3 companies from France and Europe. Institutions like Deloitte lent credibility, noting a dramatic 70% funding drop amid rising regulatory demands.

Venture funding in this sector has dropped by 70% from 2022’s peak, revealing the impact of regulatory uncertainty. This environment has seen increased compliance costs and operational challenges for startups.

Experts suggest the regulatory landscape is deterring investment and driving a brain drain. Compliance costs rose sixfold, reducing the number of operational startups, and leading to an exodus of talent and projects.

Faustine Fleuret, President, Adan, — “Web3 is becoming an economic and technological reality, yet still underestimated. While 2024 marked a turning point for the crypto-asset market, 2025 opens on a key year where ambitions will have to be realized.”

Historically, regulatory changes like MiCA and ML/TF directives led to short-term market contraction. These shifts often force companies to relocate, impacting market dynamics in more regulated regions.

Experts from Kanalcoin highlight continuing talent migration and predict further market adjustments. Historical data suggests a pattern of relocation as regulations tighten, impacting industry growth and innovation.