Despite being a small market, crypto’s influence is expanding
In remarks delivered to the European Parliament’s Economic and Monetary Affairs Committee on April 8, ESMA executive director Natasha Cazenave emphasized that crypto-related risks could one day impact financial stability. According to Cazenave, while crypto today accounts for only around 1% of total global financial assets, its integration into broader financial systems is increasing.
She highlighted that crypto is still not a core component of Europe’s financial services infrastructure — with more than 95% of EU banks having no crypto exposure. However, she cautioned that even “comparatively small” markets can become sources of broader turmoil under the right conditions.
Current risks are low — but the future could look very different
While ESMA isn’t sounding a panic alarm, the message is clear: if crypto continues to grow, and especially if it becomes more deeply embedded in the real economy, the risk of contagion increases. This is particularly true during periods of heightened market stress, when volatility in small sectors can spill over into core financial systems.
Cazenave’s concerns echo earlier calls from ESMA to delist non-compliant stablecoins following the EU’s full implementation of MiCA (Markets in Crypto Assets Regulation) in December 2024. That policy shift reflected growing pressure on stablecoin issuers to align with EU regulatory frameworks.
The EU tightens oversight while the U.S. moves toward openness
While Europe intensifies oversight, the United States is taking a notably different path. Under President Donald Trump’s administration, U.S. regulators have taken multiple pro-crypto steps, including the SEC’s promotion of crypto innovation and the Justice Department’s disbanding of its National Cryptocurrency Enforcement Team.
This contrast highlights a global divergence: Europe is emphasizing caution and control, while the U.S. appears to be embracing growth and experimentation.
The long-term outcome of these two approaches remains uncertain — but it’s clear that regulatory posture is shaping market behavior and institutional participation in different ways across continents.
Even small markets can trigger big consequences
Cazenave concluded her statement with a reminder that market size isn’t everything. In fragile macro environments, disruptions in niche sectors — including crypto — can act as catalysts for broader financial instability.
The warning suggests that regulators may intensify scrutiny if crypto adoption continues at pace, particularly in areas like payments, lending, and stablecoins. For crypto firms operating in the EU, alignment with MiCA and close engagement with policymakers will be critical going forward.