ESMA Warns of Potential Crypto Market Impact on Financial System

According to Odaily, Natasha Cazenave, Executive Director of the European Securities and Markets Authority (ESMA), addressed the Economic and Monetary Affairs Committee on April 8. She highlighted that as the cryptocurrency industry expands and its ties with traditional financial institutions deepen, a significant drop in crypto prices could trigger a chain reaction affecting the entire financial system. Currently, crypto assets account for only 1% of global financial assets and do not pose a major 'spillover effect.' However, the rapid growth of the sector, particularly in the crypto-friendly U.S. market, is notable. The European Union has implemented the Markets in Crypto-Assets Regulation (MiCA) to mitigate risks, but Cazenave emphasized that there are 'no absolutely safe crypto assets,' suggesting that additional regulations might be necessary to reduce future risks. Presently, about 10%-20% of European investors hold crypto assets, while 95% of European banks have yet to engage in this area.