Cryptology growth can threaten financial stability, warns to monitor the European Union

• Esma warns that encryption may threaten financial stability because it grows and integrates with traditional financing
• CEO Natasha Kazinaf stipulates sharp declines in encryption prices that can affect the wider financial system
• The encryption currently represents only 1 % of global financial assets, but the interconnection with traditional markets grows rapidly
• The European Union has implemented the Mika organization, but Cazenave stipulates “there is nothing like safe encrypted assets”
• The European Union’s dependence behind us, as 95 % of European banks avoid encryption activities while 10-20 % of European investors are encrypted.

The European Securities and Markets Authority (ESMA) has issued a warning about the potential risks posed by coded currencies on wider financial markets with continued growth and integration with traditional financing. Esma Natasha Kaznaf CEO High These concerns in a statement on April 8 to the Economic and Critical Affairs Committee of the European Parliament.

Today in the ECON committee, the role of encryption assets has been discussed regarding the stability of the financial market. The European Central Bank (ECB), the ESMA and the European Central Bank (ESMA) was present.

I asked a decisive question about the digital euro … pic.twitter.com/kst7frbhf

– Engin Eroglu (@ENGINEROGLU_FW) April 8, 2025

“We cannot exclude that the sharp declines in the future in encryption prices can have effects on our financial system,” CAZENAVE.

She noted that although Crypto is currently only about 1 % of global financial assets, its impact may grow when it becomes more similar to traditional markets.

CAZENAVE notes that the interconnection between encryption and traditional markets is expanding quickly. This happens faster in the United States, which generally adopted a more encoding organizational approach.

She said: “The cryptocurrency markets are rapidly developing, in an unpredictable way often, and we need to closely monitor these developments.” “The disturbances, even in small markets, can arise or stimulate the problems of broader stability in our financial system.”

Specific concerns and recent accidents

ESMA fears cover a set of problems within the encryption ecosystem. These include the rise of the boxes circulating in the exchange of encryption and the increase in the use of Stablecoin.

Cazenave also pointed out recent violations and security scandals. It was specifically mentioned by the exploitation of BYBIT of $ 1.4 billion and FTX collapsed in November 2022.

These incidents highlight the ongoing fluctuations and risks associated with cryptocurrencies. They explain why the organizers remain cautious about the growth of the sector.

The European Union has already taken steps to regulate the encryption industry through markets in organizing encrypted assets (MICA) that was implemented last year. While Cazenave described Mika as a “penetration” to regulate encryption, she confirmed that additional rules for treating future risks are needed.

“There is nothing like safe encrypted assets,” CAZENAVE warned in her statements.

The European Union is behind us in adoption

The warning comes at a time when the encryption and securities market has witnessed a decrease in double numbers in recent weeks. These drops have been linked to the Trump administration tariff plans.

Despite the increasing regulatory concerns, the dependence of encryption is still increasing worldwide. However, it appears that Europe is moving with more caution than the United States.

According to Cazenave, more than 95 % of European banks have no participation in encryption activities. It is still firmly on the sidelines of the industry.

Retail sharing grows, though. About 10 % to 20 % of European investors now have some exposure to encryption assets.

This level of retail is similar to global trends but is still behind the United States. Most of the reports that measure the adoption of the United States’s encryption indicate that between 15 % and 28 % of the population has invested in encrypted currencies.

ESMA warning reflects the constant tension between innovation in financial markets and the need to protect stability. With continued development and growth, the organizers face the challenge of balance these competing interests.

Cazenave stressed that although the current risks of financial stability of Crypto are not yet decisive, the situation requires “a continuous document monitoring.” This is particularly true in the current market environment, where small disturbances in the market can have wider effects.

Recent developments in the United States may increase the complexity of the organizational scene. The Trump administration has indicated a more relaxed approach to the organization of encryption, and reports indicate that the US Department of Justice solves the national cryptocurrency enforcement team.

These different regulatory methods between the European Union and the United States can be how to develop the encryption industry in the coming years. It may also affect the extent of inclusion in the conventional financial systems.