EU markets regulator says crypto may cause ‘broader stability issues’ as market grows

Key Points

  • Crypto market growth could disrupt traditional financial markets, warns ESMA.
  • Interconnections between crypto and traditional markets are rapidly increasing.
  • ESMA calls for closer monitoring of crypto developments due to potential stability issues.
  • EU has implemented MiCA regulation, but more rules might be needed.

Summary

The European Securities and Markets Authority (ESMA) has raised concerns about the potential impact of the growing crypto industry on traditional financial markets. ESMA's executive director, Natasha Cazenave, highlighted that while crypto currently represents only 1% of global financial assets, its increasing integration with traditional finance could lead to broader market disruptions if crypto prices experience sharp declines. Despite the implementation of the Markets in Crypto-Assets (MiCA) regulation in the EU, Cazenave emphasized the need for ongoing vigilance and possibly more regulatory measures to manage the risks associated with crypto-assets. She pointed out the rapid evolution and unpredictability of crypto markets, referencing recent incidents like the Bybit exploit and the collapse of FTX. Although Europe lags behind the US in crypto adoption, with over 95% of European banks not involved in crypto activities, retail investor interest is growing, aligning with global trends.

cointelegraph
April 9, 2025
Crypto
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