EU Regulator Concerned About Cryptocurrency and TradFi Integration

The growth of the crypto industry and its integration with TradFi structures could disrupt the stability of the global financial system, according to a statement by Natasha Cazenave, Executive Director of the ESMA.

She noted that digital assets account for only 1% of global financial assets and do not pose a significant threat to traditional markets. However, she pointed out that the interconnection between sectors, especially in the United States, is growing and requires closer attention.

“Shocks, even in small markets, can become the cause or catalyst for larger stability issues in our financial system,” Cazenave emphasized.

The ESMA representative highlighted risks associated with stablecoins, exchange-traded crypto funds, as well as instances of hacking and major scandals such as the Bybit hack and the FTX collapse.

Cazenave called for enhanced industry monitoring, despite the launch of the EU’s MiCA regulatory act, which she described as a “breakthrough.” She stated that even strict regulation does not make cryptocurrencies completely safe.

Earlier, on March 27, the EIOPA proposed a new requirement: insurers must hold capital fully equivalent to the value of their investments in crypto assets.