The European Securities and Markets Authority (ESMA) warned that Crypto would increasingly threaten the stability of traditional financial markets as the industry develops and become more intertwined with traditional financial actors.
“We cannot exclude that future net decreases in cryptography prices could have training effects on our financial system,” said ESMA executive director Natasha Cazenave, in a declaration of April 8 at the Committee on Economic and Monetary Affairs.
Cazenave, however, noted that the crypto currently represents only 1% of global financial assets and is not yet significant enough to cause major “overflow effects” on traditional financial markets.
She warned that interconnections between crypto and traditional markets are developing quickly – especially in the more user -friendly United States of crypto – and have called for narrower surveillance.
“The crypto-active markets evolve quickly, in an often unpredictable way, and we must keep an attentive eye on these developments,” said Cazenave, adding:
“Disorders, even on small markets, can come or catalyze wider stability problems in our financial system.”
Cazenave’s concerns were negotiated funds in exchange for crypto spots and the use of stables to hacks, scams and S1Candals – highlighting the recent exploit of $ 1.4 billion and the collapse of FTX in November 2022.
The European Union has already implemented several measures to safeguard cryptographic risks, including the Crypto-Asets (MICA) markets which was deployed last year.
While Cazenave said that mica has marked a “breakthrough” for cryptographic regulations, it added that there is no “safe crypto writing” and that more rules should be implemented to mitigate future risks.
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His comments arise both because the crypto and the stock markets have experienced two -digit falls in recent weeks while the Trump administration continues to follow its pricing plans.
Europe is late in the adoption of cryptography
While the adoption of the crypto has accelerated in the United States, Cazenave noted that more than 95% of European banks remain on the sidelines, without involvement in the activities related to the crypto.
However, retail participation is increasing, with around 10% to 20% of European investors with an exposure to cryptography, which is in accordance with growing world interest, said Cazenave.
Most reports measuring the adoption of American cryptography suggest that the adoption range is between 15% and 28% of the population.
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