ESMA warns crypto could pose risks to financial stability

The European Securities and Markets Authority is sounding a fresh caution at the potential risks crypto could pose to financial markets.

ESMA, the European Union’s securities watchdog, has once again touched on the issue of crypto regulation, warning that crypto-related risks could impact financial stability. 

According to ESMA executive director Natasha Cazenave, this possibility has increased as the cryptocurrency industry records tremendous growth amid further integration with traditional finance.

Cazenave commented on the topic in an opening statement at the European Parliament’s Economic and Monetary Affairs Committee hearing on crypto-assets and financial stability on April 8, 2025.

But while ESMA sees events in the crypto assets markets as likely risks to financial stability in the future, the current impact is minimal. 

Cazenave noted that crypto remains a relatively small sector, only accounting for about 1% of the total global financial assets. There’s also “limited integration” with traditional finance and the real economy, with crypto not yet a major part of the global financial services market, including payments. More than 95% of EU banks also do not participate in crypto, Cazenave said.

“Crypto-assets markets are still comparatively small. However, in the current market environment, turmoil even in small markets can originate or catalyze broader stability issues in our financial system,” she concluded.

The new warning from ESMA comes a few months after the agency asked for the delisting of stablecoins that remained non-compliant with the Markets in Crypto Assets rules. MiCA went into full implementation in December 2024 and ESMA’s statement followed swiftly in January 2025.

While the EU’s markets watchdog revisits the topic of crypto asset risks, there’s a marked shift in approach from regulators in the United States. The U.S. Securities and Exchange Commission has taken multiple positive steps to promote crypto innovation, a similar approach taken by President Donald Trump’s administration.

The Justice Department also announced it was disbanding its National Cryptocurrency Enforcement Team.