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Senior officials from the European Securities and Markets Authority (ESMA) and the European Central Bank (ECB) remain cautious of potential financial stability risks posed by the rapid growth of crypto-asset markets, calling for strong supervisory implementation of existing rules and international coordination to prevent emerging threats.
Speaking to members of the European Parliament (MEPs) on the Economic and Monetary Affairs Committee (ECON) last week, ESMA executive director Natasha Cazenave said crypto-assets remain “highly volatile and largely speculative”, despite the EU’s comprehensive regulatory framework under the Markets in Crypto-Assets Regulation (MiCA).
She cited a 140 percent surge in Bitcoin prices in 2024, followed by a sharp correction, and warned that “despite MiCA, there will be no such thing as a safe crypto-asset”.
Although the current level of interconnectedness between crypto-assets and the broader financial system is limited, Cazenave said it is growing.
Ulrich Bindseil, director general for market infrastructure and payments at the ECB, reinforced those concerns in a presentation, where he highlighted the pseudonymous and decentralised nature of public crypto networks.
Bindseil warned that these could enable illicit financial flows and ransomware attacks, adding that legal uncertainties, code vulnerabilities and poor governance further exacerbate operational risks.
Unbacked crypto-assets like Bitcoin were criticised for offering no intrinsic value while facilitating speculative bubbles that can distort wealth distribution, he said.
He suggested stablecoins represent growing structural risks, while Bindseil warned of potential “fire sales” of reserve assets if redemptions spike, particularly as stablecoin issuers lack access to central bank liquidity. He also raised concerns about deposit outflows from traditional banks and the threat of “crypto-dollarisation” undermining monetary sovereignty, especially in emerging economies.
Industry representatives and some parliamentarians struck a more optimistic tone. Appearing alongside regulators, Robert Kopitsch, secretary general of Blockchain for Europe, urged policymakers not to rush into drafting “MiCA 2.0” legislation before the current framework is fully implemented and tested.
“It is clear that implementation takes time and MiCA has only just entered into force,” he said, adding that firms are also in the process of implementing other regulatory measures, such as the Digital Operational Resilience Act.
“Together, these create a multi-dimensional framework that mirrors, and in some areas surpasses, existing financial regulation,” he said. “It also gives responsible companies the confidence to build in Europe. Let’s take pride in this achievement, and commit to making it work.”
He warned that premature legislative expansion could undermine legal certainty and delay the onboarding of compliant firms.
Instead, he called for an evaluation phase post-2026, once supervisory data is available and the European Commission has delivered its planned review.
His thoughts were echoed by Stefan Berger, an MEP who was rapporteur for the MiCA regulation, who said it was important to keep in mind that crypto-assets are not hugely impactful to financial stability.
“I think the regulations in place are good,” he said. “We managed to prevent abuse, but nevertheless, we are a market economy and we have mechanisms for price formation. If a price rises, why should we not permit it?”
He said that the most significant point for him is stablecoins, to which he commented “we shouldn’t overregulate here”.
“The Commission is going to start a review process, we want transatlantic cooperation,” he said. “We want to work with the US and find international cooperation and not create some kind of MiCA 2,” he said.
Cazenave was open-minded, in contrast, suggesting that ESMA is currently “monitoring whether more needs to be done there”.
“We are not advocating for more requirements in the stablecoin area, but for close monitoring, making sure that we identify any risks building up in the system.”
The regulator suggested that if there was “more appetite” among traditional financial institutions, then this could be an area with “spillover”.
Kopitsch also pushed back on potential restrictions on non-EU-issued stablecoins, arguing that such measures could be economically counterproductive and legally unnecessary.
Instead, he proposed developing an equivalence regime to allow cross-border compliance without duplicative burdens, stressing that many of these tokens are already used as key settlement assets in tokenised finance across Europe.
However, his viewpoint clashed with that of MEPs on both the right and left, with the Socialists and Democrats MEP Eero Heinäluoma warning of “systemic risks” of the stablecoin Tether, which is pegged to the US dollar.
“Can its security risks be adequately addressed by MiCA,” he asked, as well as raising the matter of the ByBit attack, an issue that Cazenave expressed concern about the “magnitude” of.
Nevertheless, the ESMA official seemed confident that the MiCA framework, including IT requirements as well as operational resilience rules in DORA should mean that there is some cyber protection.
Polish MEP Marlena Maląg, meanwhile, agreed with Kopitsch that MiCA was “a pioneering move” from the EU, considering its first mover basis for crypto oversight.
However, the right-wing MEP warned that the regulation may not “be enough” to tackle financial stability issues, adding that the “crypto-friendly” influence of the US is likely to spur more crypto-asset adoption in the EU.
Cazenave cautioned that “we will have to see”, but added that “provisions” in MiCA have “taken account” of this matter.
Although crypto-assets are having a field day with US financial regulators and politicians, the cautious approach being taken in Europe seemingly lives to see another day.
MiCA 2.0 seems to be a topic some way off currently; however, one crisis could be enough to push regulatory officials and MEPs alike towards wanting increased oversight.
