The Chair of the European Securities and Markets Authority (ESMA), Natasha Cazenave, has called for ongoing monitoring of the cryptocurrency sector. She emphasized that the increasing interconnection of this sector with traditional financial markets creates new risks.
This is reported by Finway
In her speech before the Economic and Monetary Affairs Committee of the European Parliament, Cazenave noted that the growing involvement of crypto assets in traditional financial markets poses a threat to their stability in the event of a price collapse. “The cryptocurrency sector carries significant risks for individual investors,” she stressed. ESMA has already issued several public warnings regarding this matter, notably in 2017 and 2024.
Cazenave also pointed out that, despite the implementation of the MiCA regulation, there is no concept of a “safe crypto asset.” The regulator continues to monitor the risks that crypto assets may pose to the stability of the financial system. She remarked that while risks remain high, they are still not critical.
“In particular, crypto funds and derivatives require monitoring, as they facilitate access to crypto assets, including for institutional investors, and can serve as a channel for transmitting risks between cryptocurrency and traditional markets. However, we do not consider these products to be a serious risk to financial stability at this time due to their small size,” Cazenave emphasized.
It is estimated that cryptocurrency ETFs in the European Union account for less than 1% of the total fund volume. However, given the continuously growing interconnection between cryptocurrency and traditional financial markets, Cazenave believes it is necessary to continue monitoring. The share of digital assets in retail investors’ portfolios in Europe ranges from 10% to 20% and continues to grow.
The Chair of ESMA also discussed the support for the crypto industry from the new U.S. administration, noting that “the U.S. administration’s stance on cryptocurrencies — particularly the actions of certain agencies aimed at easing requirements — may create conditions for more institutional investors to begin investing in crypto assets.” She also mentioned that if the risks associated with crypto assets increase, it could have a negative impact on the financial system in the event of a sharp decline in the prices of these assets.
Cazenave is not the first to express concern about the policies of U.S. President Donald Trump, who supports the cryptocurrency sector. Previously, similar concerns were raised by a member of the Executive Board of the European Central Bank (ECB) and the Governor of the Bank of France, François Villeroy de Galhau.