EU wary of cryptocurrency impact on stability of traditional finance
Date: 2025-04-10 Author: Gabriel Deangelo Categories: CRYPTO PAYMENTS
The Executive Director of the European Securities and Markets Authority (ESMA) Natacha Cazenave expressed concerns about the growing integration of digital assets into traditional financial structures. Although cryptocurrencies currently account for only about 1% of the total volume of global financial assets, the increasing intertwining with TradFi markets - especially in the US - requires close attention.
Cazenave noted that even minor shocks in crypto markets can cause a chain reaction affecting the stability of the entire financial system. She emphasized that risks can come not only from the assets themselves, but also from the infrastructure, including cases of hacker attacks, technical failures and high-profile incidents such as the collapse of FTX or the Bybit hack.
The head of ESMA paid special attention to stablecoins and cryptocurrency exchange-traded funds, which, according to her, have the potential to strengthen the connection between digital assets and classic instruments, creating additional threats to stability.
Although the EU has adopted the MiCA law regulating the circulation of cryptocurrencies, Cazenave urged not to weaken control. She called this act an important step forward, but reminded that even strict regulations do not completely eliminate all threats. Regulators, in her opinion, must remain vigilant and take into account the rapid development and transformation of the sector.
Earlier, on March 27, the European Insurance and Occupational Pensions Authority (EIOPA) proposed introducing a new rule for insurance companies. According to the initiative, insurers must ensure capital coverage of their investments in crypto assets in full, which will reduce potential risks for clients and the financial system as a whole.
Thus, European regulators make it clear that despite formal regulation, the crypto industry continues to be a source of potential instability and requires constant supervision and updating of control approaches.
