ESMA Warns Growing Crypto Links Could Amplify Financial Risks

The European Securities and Markets Authority, the European Union's financial-markets watchdog, said deeper links between crypto assets and traditional finance could create new channels for shocks to spread. Tokenised equities, decentralised finance and prediction markets increasingly connect blockchain-based products with established institutions and infrastructure, raising the stakes for liquidity, operational and contagion risks even while those activities remain small relative to mainstream markets.

In its second risk-monitoring report of 2026, published on Sept. 10, ESMA said crypto assets had lost nearly 2 trillion euros in market value since their October 2025 peak. The value of tokenised equities rose to about 1.9 billion euros by end-June from 300 million euros at end-2024, a 6.5-fold increase. DeFi total value locked fell 38% in the first half to 70 billion euros, while the regulator also flagged manipulation and insider-trading risks in prediction markets.