The European Securities and Markets Authority (ESMA) has issued a warning about potential financial instability stemming from the cryptocurrency market’s rapid growth. Executive Director Natasha Cazenave expressed concerns that a significant drop in crypto prices could trigger cascading effects on the broader financial system. While currently accounting for only 1% of global financial assets, she highlighted the sector’s growing connection with traditional finance institutions as a potential risk factor. The EU’s Markets in Crypto-Assets Regulation (MiCA) aims to address risks, but Cazenave emphasizes that no cryptocurrency is entirely secure and calls for further regulations to mitigate future risks. Across Europe, 10%-20% of investors hold crypto assets, while only 95% of European banks have currently engaged with this area.