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ESMA Warns Stronger Crypto-Traditional Finance Links Raise Risk of Shock Spillovers

ESMA Warns Stronger Crypto-Traditional Finance Links Raise Risk of Shock Spillovers

  • The European Securities and Markets Authority, or ESMA, warned that deeper links between the crypto asset market and traditional finance could allow shocks in one market to spread to the other.
  • ESMA said the growth of tokenized stocks and decentralized finance (DeFi) hacks are key risk factors that could affect existing market structures and financial stability.
  • ESMA said a rise in on-chain trading in crypto-based prediction markets could make it harder to detect unfair trading practices such as insider trading, wash trading and coordinated price manipulation.

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Photo: ESMA
Photo: ESMA

The European Securities and Markets Authority warned that the growing intersection between…

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