European banks and financial institutions may be significantly underestimating the demand for cryptocurrency services, according to a new report by crypto investment platform Bitpanda. 

The findings reveal that while 80% of financial institutions recognize the growing importance of digital assets, fewer than one in five currently offer crypto-related products.

The study, titled Europe Diving Into Crypto, highlights a stark contrast between investor interest and institutional offerings. More than 16% of private investors and over 40% of business investors have already invested in crypto, with an additional 12% and 18%, respectively, planning to do so in the future. 

Yet, only 19% of financial institutions within the EU provide crypto services, and among those that don’t, a mere 12% plan to introduce offerings within the next three years.

“The demand is clearly there, but financial institutions remain hesitant,” the report states.

One of the primary reasons cited by banks for not offering crypto services is regulatory uncertainty. While the European Union's Markets in Crypto-Assets Regulation (MiCA) is expected to provide clearer guidelines, institutions still face high compliance costs and complex licensing requirements.

Additionally, some banks remain skeptical of the long-term viability of digital assets, citing concerns over volatility, security risks, and integration with existing financial systems.

Despite these concerns, financial institutions that fail to act may find themselves losing customers to more crypto-friendly competitors. 

The report indicates that over 30% of private and business investors prefer working with a single financial provider for both traditional and crypto services. This presents a lucrative opportunity for banks willing to bridge the gap between conventional finance and digital assets.

Some institutions are already recognizing the shift. A growing number of European fintech firms and challenger banks have begun integrating crypto products, offering trading, custody, and yield-generating services to attract a new generation of investors.

With the demand for crypto services continuing to rise, European banks face a critical decision: adapt to the changing financial landscape or risk falling behind. 

As regulatory clarity improves and digital assets become further embedded in the global economy, institutions that embrace crypto may find themselves better positioned for long-term growth.

For now, however, the gap between investor demand and institutional supply remains wide—leaving a significant portion of the market underserved.