Why Europe Bests the US at Attracting Crypto Startups

Why Europe Bests the US at Attracting Crypto Startups

(Guillaume Périgois/Unsplash)

For years lawyers have warned of the risks associated with running a cryptocurrency business in the United States, especially when a token is involved. Regrettably, those risks are more apparent than ever.

As New York- and Austrian-licensed attorneys, we’ve talked countless clients out of publicly selling tokens in the U.S. or generally pursuing their businesses there. We’ve personally witnessed one of our European clients – a small fish by anyone’s account – fall victim to U.S. regulators’ zeal to shape the law through enforcement, presumably to establish precedent to go after bigger and badder actors in the distant future. 

The saying “the gears of justice turn slowly” is particularly true for U.S. regulators, who just this year have secured important court rulings against companies that sold tokens in and . One thing is clear: Token issuers in 2020 and beyond cannot ignore U.S. securities laws without risking severe fines and litigation many years down the road.

Fortunately, the U.S. is not the only market in the world where companies can raise capital by selling tokens. We agree with U.S. lawyer Preston J. Byrne, who remarked in a CoinDesk :

It is also true that there are, without a doubt, countries in the world that do countenance token offerings. Go there. U.S. securities laws are not meant to restrict the sale of tokens in those places.” (emphasis added)

The European Union is one of the hottest regions in the world in terms of raising capital through token offerings, according to . And, as more and more companies choose to put the United States on the list of banned jurisdictions alongside countries like Afghanistan, North Korea and Syria, the EU is bound to become even more popular. 

In the last year, European-based projects like Polkadot (Switzerland) and Bitpanda (Austria) have sold tokens worth millions of euros through initial coin (ICO) or initial exchange (IEO) offerings. Leading blockchain projects such as and MakerDAO are supported by Swiss foundations, and up-and-coming players like and (both of which are clients of the authors) are Austrian companies that have concluded financing rounds with prominent U.S. venture capital firms while maintaining their headquarters in Europe. On top of that, Bitpanda raised in 2019 by selling BEST tokens. public sale of its own MPH token is currently underway.  

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