EU Regulator ESMA Warns of Crypto 6c4n6j Linked Financial Stability Risks

An ESMA official said that despite the EU's MiCA rules, there is no such thing as a "safe crypto-asset." f1g6z

Written by David Delima | Updated: 9 April 2025 19:08 IST

EU Regulator ESMA Warns of Crypto-Linked Financial Stability Risks

Photo Credit: Unsplash/ Maximalfocus 5x1g3d

Crypto Kraken, BitPanda, and OKX have flocked to the EU recently

Highlights

The EU is among the most crypto regulated regions in the world
The MiCA regulations went fully live in December 2024
Crypto's instability is a reason for worry, as per the ESMA

ment

The European Securities and Markets Authority (ESMA) has addressed the risks linked to crypto assets at a time when the sector is seeing growth in the European Union (EU). An ESMA official has highlighted that crypto assets still pose a significant threat to financial stability, despite the introduction of the MiCA regulation in the region. The agency also cautioned individuals against falling for the hype around crypto — without understanding the associated risks properly.

ESMA Executive Director Natasha Cazenave, voiced her crypto-related concerns before the Economic and Monetary Affairs Committee on April 8.

In her opening statement, Cazenave said, "despite cryptocurrencies, the market still remains largely unstable and unpredictable. Despite the fluctuations, however, the exposure of investors to digital assets is increasing, Cazenave said.

Binance Enables Crypto-to-Fiat Transactions Through Apple Pay, Google Pay

"Following the 2024 boom, crypto-assets lost more than 20 percent in value during the first quarter of 2025 amid deteriorating macroeconomic conditions, shifting investors' sentiment and the largest-ever crypto hack at Bybit," the official stated.

Her statement holds true for Bitcoin — which rose to over $108,000 (roughly Rs. 94 lakh) in December 2024 and has since declined to its present price of $76,538 (roughly Rs. 66.2 lakh). Ether, Ripple, Dogecoin, and Cardano are also among popular cryptocurrencies that have drastically slipped in their prices owing to President Trump's new tariff levied on many nations including China and India.

" Crypto-assets markets are still comparatively small. However, in the current market environment, turmoil even in small markets can originate or catalyse broader stability issues in our financial system," Cazenave added.

US SEC Says Stablecoins Aren’t Securities That Require Registration

Convergence of Crypto Assets Taking Place at a Rapid Pace 3f4vm

ESMA, the financial watchdog of the EU, has observed that the convergence of crypto assets and traditional markets is taking place at a rapid pace.

As per estimates cited by the official, crypto adoption by retail investors could range between 10 percent and 20 percent across the 27 EU nations.

The ESMA official further noted that crypto ETFs and stablecoins have also gained popularity among investors in recent times. Data she shared claimed that Spot Bitcoin ETPs, launched in January 2024, have clocked inflows touching EUR 34 billion (roughly Rs. 3,24,513 crore) — making for a one-third portion of gold ETFs.

Stablecoins, she said, have grown to represent eight percent of the crypto market holding EUR 210 billion (roughly Rs. 20,04,135 crore) in collective market cap.

Crypto Regulation in the EU 6d4vx

The EU had finalised its MiCA (Markets in Crypto-Assets) regulations in 2022 to protect investors against crypto-related risks like scams and financial losses. The law went into effect on December 30, 2024, and it comprehensively outlines licensing requirements and clean business practices for crypto firms.

In recent months, multiple crypto firms like Kraken, BitPanda, OKX, Crypto.com, and Standard Chartered, obtained official MiCA approvals to set up shops in the EU nations.

As per Cazenave, the MiCA regulation is an important milestone in addressing crypto-related risks in the EU market.

Comments

For the latest reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Further reading: Financial Stability

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at [email protected]. More