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 MiCA, there will be no such thing as a safe crypto-asset.” Owing to the highly speculative and volatile nature of cryptocurrencies, the market still remains largely unstable and unpredictable. Despite the fluctuations, however, the exposure of investors to digital assets is increasing, Cazenave said.
“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.
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Convergence of Crypto Assets Taking Place at a Rapid Pace
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
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.
