The Chair of the European Securities and Markets Authority (ESMA), Natasha Cazenave, emphasized the need for continuous monitoring of the cryptocurrency sector, believing that the growing connection between cryptoassets and traditional financial markets poses risks to their stability.
This is reported by Business • Media
In her speech before the European Parliament’s Committee on Economic and Monetary Affairs, Cazenave expressed concerns about the cryptocurrency support policy pursued by the administration of U.S. President Donald Trump. She noted that the increasing involvement of cryptoassets in traditional financial markets (TradFi) raises the likelihood of significant losses in the event of a price crash.
“In particular, crypto funds and derivatives require monitoring, as they facilitate access to cryptoassets, especially for institutional investors, and can serve as a channel for transferring risks between cryptocurrency and traditional markets. However, we do not consider these products to be a serious risk to financial stability at this time due to their small size. According to our estimates, cryptocurrency ETFs in the EU account for less than 1% of the total fund volume.”
Despite the implementation of the MiCA regulation, Cazenave stressed that the concept of a “safe cryptoasset” currently does not exist. She also noted that the regulator continues to monitor the risks that cryptoassets may pose to the financial system.
Cazenave pointed out that the share of digital assets in retail investors’ portfolios in Europe ranges from 10% to 20% and continues to grow. She emphasized the importance of ongoing oversight in light of the increasing interconnection between the cryptocurrency and traditional financial markets.
The Chair of ESMA also touched on the impact of the new U.S. administration on the cryptocurrency market, noting that easing regulations could encourage more institutional investors to invest in cryptoassets. She warned that if risks increase, a sharp decline in prices could negatively affect the financial system.
Cazenave is not the only one expressing concerns about Trump’s policies. Similar remarks have previously been made by a member of the Governing Council of the European Central Bank (ECB) and the Governor of the Bank of France, François Villeroy de Galhau.