ESMA: “Crypto-Traditional Finance Linkages Deepening… Shock Contagion Risk Growing”

The European Securities and Markets Authority (ESMA) has warned that as the intersection between crypto asset markets and traditional finance expands rapidly, the potential for shocks in one market to spread to the other is also increasing.

In a risk monitoring report released on the 10th (local time), ESMA stressed that “the possibility of vulnerabilities in crypto asset markets spreading to the traditional financial system must be closely monitored.” The agency explained that as crypto assets become more integrated into the regulated financial system, the growing interconnections between markets could act as a new variable affecting financial…