Galaxy Digital Turns to Europe for Crypto Growth Amid Regulatory Struggle

Amid increased regulatory scrutiny in the United States, Europe has become an attractive destination for crypto firms. Galaxy Digital, the crypto venture led by US billionaire Mike Novogratz, is now venturing into the European market for greener pastures.

As part of this expansion, the company has appointed Leon Marshall, formerly an executive at the crypto broker Genesis, as its first Head of Europe. Marshall is tasked with establishing a regional presence based in London.

Galaxy Digital’s European Expansion

Marshall, who joined the investment group in June, explained to the Financial Times that one of the pivotal factors influencing this decision was Europe’s progress in developing legal frameworks for trading digital assets.

Earlier this year, the European Union passed comprehensive crypto regulations – “Markets in Crypto-Assets” (MiCA) – designed to provide industry guidelines and investor protection. Meanwhile, under Prime Minister Rishi Sunak’s leadership, the United Kingdom is also actively competing to position itself as a prominent crypto hub.

In a statement, Marshall said,

“The European market demand that we’re seeing, combined with the regulatory framework established by Mica, is robust. That makes Europe a desirable destination for crypto firms to build and grow. We’ve seen a lot of competitors exit the space and that’s offered a unique opportunity for us.”

Meanwhile, the exec announced plans to onboard staff across Galaxy’s investment banking, asset management, crypto lending, and derivatives businesses.

The New York-based firm had been reporting negative quarterly revenues since late 2021. With the subsequent decline in cryptocurrency prices, Galaxy Digital was forced to reduce its workforce by 20%. Its financial losses were further amplified following the collapse of FTX, as the company had more than $76 million in exposure to the bankrupt exchange.

However, Galaxy Digital turned profitable in the first quarter of 2023, benefiting from improved market conditions. During this period, it reported a net income of $134 million, compared to the net loss of $288 million incurred in the fourth quarter of 2022.

US Crackdown on Crypto

The latest development paints a striking contrast to the regulatory landscape for digital assets in the United States, which has thus far failed to offer clear guidance for the cryptocurrency industry.

Meanwhile, the SEC has continued to pursue aggressive enforcement actions targetting some of the top players, such as Binance and Coinbase.

The financial regulator has received significant backlash, particularly in the aftermath of notable legal setbacks, first against blockchain firm Ripple and, more recently, against digital asset manager Grayscale Investments.

Numerous companies like eToro and Ark Invest have already revealed their European expansion plans. Ripple’s CEO Brad Garlinghouse recently predicted that more crypto firms and businesses will likely do the same, citing “confusing regulations” in the country as a motivating factor.