European crypto and defence startups are looking to deepen their ties to the US as the incoming Trump administration signals plans to deregulate and increase government tech procurement.
The US has long attracted European startups seeking more customers and greater sums of venture capital money, but following Donald Trump’s reelection, founders tell Sifted they’re accelerating hiring efforts on the other side of the Atlantic and even mulling relocation.
Trump, along with key advisor Elon Musk, is expected to reduce regulation in sectors like crypto — having reportedly designated the sector a policy priority — and disrupt the defence sector by awarding more government contracts to tech companies.
Last week, Ambre Soubiran, CEO of Paris-HQ’d crypto data provider Kaiko, announced she’s relocated to the US in anticipation of sweeping changes to crypto regulation stateside, which has largely been hostile under the Joe Biden administration.
“I don’t want us to miss out on the US market share because we’re not perceived as a global company with a footprint there,” she says in an interview with Sifted.
Policy priorities
In crypto, the move is largely influenced by regulation. Under Biden, the US Securities and Exchange Commission turned up the heat on crypto, with more than 100 enforcement actions filed against the sector in recent years. Amid the clampdown, industry leaders toyed with fleeing to other jurisdictions such as the UAE and Europe.
But Trump’s election changed everything, says Sep Alavi, head of digital assets at VC firm White Star Capital.
“If you look at the people surrounding Trump that are advising him on the tech side, the majority of them, if not all of them, are pro-crypto,” he says. “This would not have been the case under the Kamala Harris administration.”
European crypto startups raised $1.3bn in 2024, according to Dealroom, while their US counterparts raised almost double, $2.5bn. With all that extra capital to play for, Europe’s crypto crew is betting on Trump to roll out the regulatory red carpet for the digital asset sector after his embrace of the industry during last year’s presidential campaign.
On Thursday, Bloomberg reported the president plans to release an executive order designating crypto a policy priority, citing people familiar with the plans. Policies floated include the creation of a crypto advisory council to advocate for the industry. Pausing litigation against crypto firms was also up for discussion, said the report.
Before the US emerged as a crypto-friendly regulatory regime, Europe’s Markets-in-Crypto-Assets (MiCA) regulation offered clearer guidelines and was a competitive advantage for the continent’s startups. Now it’ll have to face off against the US, where the size of the digital asset market is bigger.
On the defensive
Deregulation could also benefit defence tech startups, says Pari Singh, cofounder and CEO at London-based Flow Engineering — a GitHub-like platform targeting engineers building hardware, including in the defence sector.
Trump’s “chief buddy” Musk — who is leading a government efficiency group called the Department of Government Efficiency (DOGE) — has signalled that one of his key priorities for reform would be to strip back regulation.
“[There’s a feeling among startups that] Musk and Trump will massively deregulate the defence industry,” says Singh, specifically pointing to the Federal Aviation Authority (FAA), which regulates US airspace and many defence companies that operate in it. Deregulation of the FAA could also benefit Musk’s SpaceX.
“Already before Trump, there was a huge difference between US regulatory bodies and European ones,” Singh says. The “general perception” is that that gulf between the US and Europe will increase under Trump, he adds.
There’s also the promise of greater access to government contracts for startups — the crucial buyer for defence tech companies.
Trump’s defence secretary pick Pete Hegseth criticised the Pentagon for trying to “block new technologies” and emphasised the need to speed up weapons development with increased competition in his confirmation hearing last week, reported the FT. Many have taken this as a signal that the incoming administration will look further than incumbent defence companies for government contracts and startups could be the beneficiaries.
All of that will have a knock-on impact on up-and-coming defence tech startups in the country, says Singh. “The 50-100 defence tech companies at Series B in the US will massively scale during the Trump administration.”
He tells Sifted that Flow is planning on increasing hiring in the US to take advantage of the growing market, spurred on by Trump’s return to power. “Trump and Musk will accelerate deeptech sectors like defence. The whole thing is about to go into overdrive.”
Follow the money
The loosening of digital asset regulation in the US offers a rare opportunity for Europe’s startups to make it big in America. Kaiko’s Soubiran expects the pro-crypto administration to increase institutional demand for crypto-based financial products.
“The US is where the industry growth from an assets under management standpoint is biggest,” she says.
Half of Kaiko’s revenue currently comes from providing US institutional clients and crypto companies annual licences which give access to crypto market data. Clients — including US financial regulators like the SEC and CFTC, assets managers, and crypto-native companies — are charged upwards of $100k for a licence.
Other crypto companies with institutional clients are making similar moves. Copper, a UK crypto company catering to crypto funds, wealth managers and family offices seeking secure digital asset custody, is going to primarily focus on the US, its head of research Fadi Aboualfa told Sifted in December.
Later that month, Copper dropped its second attempt to register as a cryptoasset firm in the UK, choosing instead to focus on priority markets such as the US and the Middle East.
More procurement
French defence tech startup Zephtech, which is building smart weaponry, is now “strongly considering” a move to the US, says founder and CEO Thomas Bernaudon, citing the potential government contracts up for grabs.
The country already has the biggest defence budget in the world. It spent $916bn in 2023 — more than three times as much as China, the next highest country on the list — and is way ahead of Europe on funding for defence tech. In 2024, startups in the country picked up $2.4bn, according to Dealroom, while $595m was raised by European startups.
It’s also got a myriad of government-backed bodies like DARPA and the National Security Innovation Capital (NSIC) (part of the US defence department’s tech procurement division) — which help fund and funnel private capital towards defence tech startups.
“The Trump administration is more conservative than the previous one,” says Bernaudon. “They will close their borders to some products and imports, so they will want people to start building a lot more within the US.”
Even for startups not currently planning a move, Trump’s deregulatory agenda has got them paying close attention. “At the end of the day, if regulation [in Europe] becomes a threat to our business, we will need to take action,” says crypto startup Flowdesk’s Guilhem Chaumont. “Obviously right now we are very far from that.”
He tells Sifted that his “biggest concern right now” is that the regulatory landscape has shifted in favour of the US. “It’s going to be very hard for Europe to compete given the current regulatory landscape.”
While he adds that the Bpifrance-backed company isn’t planning to relocate across the Atlantic at the moment, Chaumont anticipates a third of the 100 hires it makes in 2025 will be US-based.
“The US is moving faster, it’s got more money and startups can operate with less regulation,” says Singh. “The US is pulling us closer.”
Read the orginal article: https://sifted.eu/articles/trump-crypto-defence-startups-deepen-us-ties-news/
