The European Securities and Markets Authority (ESMA) issued another warning on 8th April 2025 regarding potential risks crypto assets pose to the financial system, whilst 95% of EU banks continue to avoid crypto activities. Natasha Cazenave, ESMA's Executive Director, emphasised before the European Parliament that although the crypto asset market remains relatively small, in the current market environment even small market disruptions can cause or catalyse broader stability problems in the financial system.
In her speech, Cazenave highlighted that EU financial markets are currently under severe pressure due to broader political and geopolitical developments, particularly following President Trump's tariff announcements, which caused both stock markets and crypto prices to plummet sharply. ESMA data shows crypto-focused funds represent less than 1% of the EU fund universe, and stablecoin collapse - typically dollar-pegged cryptocurrency - could affect the price of underlying financial instruments, potentially with broader market consequences.
The authority forced crypto service providers in January 2025 under the MiCA (Markets in Crypto-Assets) framework to sever ties with non-compliant stablecoins, prompting major exchanges like Binance and Coinbase to delist tokens such as Tether USDT and DAI for EU users. ESMA continues closely monitoring the crypto sector, emphasising that whilst financial stability risks from crypto assets are growing, they remain non-significant. The regulatory authority continues urging caution as crypto asset markets evolve rapidly, and with deepening connections to traditional finance, tomorrow's story may differ from today's situation.
Sources:
1.
The European Union’s markets watchdog warns that cryptocurrencies continue to pose significant risks to financial stability, citing increased adoption and ongoing regulatory concerns.
2.
Europe’s leading financial regulator has raised concerns about the growing risks cryptocurrencies pose to financial stability, as digital assets see wider adoption across the continent.
3.
The European Securities and Markets Authority (ESMA) has cautioned that the growth of crypto assets could increase risks to the stability of the financial system, urging stronger regulatory oversight.
4.
nikoletasdiplomacy.edu
