• The European Union has given $30 million to a new blockchain and digital assets fund

  • Analysts have long bemoaned the European Union’s lack of local tech behemoths, citing the gap between the EU and competitors such as the US and China. The EU, on the other hand, appears to be increasing its spending on breakthrough technologies. The European Investment Fund (EIF), the EU agency in charge of SME finance, recently announced its support for new digital assets and blockchain funds.

    Fabric Ventures, a Luxembourg-based venture capital firm that invests in digital assets, tokenization initiatives, and other blockchain applications, has received $30 million from the EIF for its 2021 fund, out of a total of $120 million.

    Executives from Ethereum, PayPal, (Transfer)Wise, Square, Google, Galaxy Digital, PayU, Ledger, and others are among the other high-profile investors, but the EIF’s involvement is seen by the fund’s founders as a significant signal that the bloc is taking a new, strategic approach to tech investments.

    Richard Muirhead, Max Mersch, and Anil Hansjee, the latter of whom led PayPal Ventures EMEA for five years, make up the Fabric Ventures team. The trio previously created the Firestartr fund, which was supported by Bitstamp, Tray.io, Railsbank, and others and focused on digital currencies, decentralized governance, and market infrastructure. In an interview, Muirhead discussed the significance of the EIF’s engagement in the new project:

    “The important thing to note here is that the European Commission recognizes that this is a geopolitical hotspot for the EU union. On the one hand, you have North America’s ‘wild west’ attitude, and, arguably, on the other, the Chinese Communist Party’s surveillance state.”

    Leaving aside whether one agrees with Murihead’s assessment of the US and China’s policies, he believes Europe is developing a “third way for the person,” attempting to harness new technologies that can promote “networks and marketplaces” amongst people who share data for their own and mutual gain.

    Fabric Ventures believes that in ten years, the network capitalization of Bitcoin and Ethereum will have surpassed $1 trillion, owing to the adoption by major institutions such as Goldman Sachs, PayPal, and Tesla. Under the banners of “open web” and “open finance,” the fund seeks to invest in a variety of software tokens, decentralized networks, and applications, as well as traditional equity.

    EIF CEO Alain Godard stated in an official statement about the EIF’s decision to support the fund that the partnership aims to address the financial support needs of startups and entrepreneurs working in the field of blockchain, which he described as “of particular strategic importance for the EU and our competitiveness on the global stage.”

    Parallel to this recognition of the digital economy’s growing importance, the European Commission is taking steps to enhance its anti-money laundering (AML) system and establish a new AML oversight agency, which has ramifications for the crypto area. According to recently released documents from the Commission, the existing under-regulation of crypto asset transactions in the EU has raised worries that this exposes crypto investors to money laundering and terrorism funding dangers.

    Markets in Crypto-Assets, or MiCA, is a regulation proposed by the Commission that aims to establish a complete regulatory framework for the sector.

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