Crypto Volatile But Innovative According to European Financial Regulator

Cryptoasset volatility prompts people to take risks, according to a new report

According to a new report published by the European Financial Regulator, crypto assets and ledger technology (DLT) took part in the 2021 financial innovation summit of the European Securities and Markets Authority (ESMA).

The report claimed that crypto-asset volatility is contributing to increased risk across all its classes, with the rise of decentralized finance (DeFi), central bank digital currencies (CBDC), and stablecoins.

In his report he said:
“Most crypto assets (CAs) are highly volatile in price and operate outside the current EU regulatory framework, raising investor protection issues.”


According to the report, increased risk-taking and market enthusiasm are blamed for increased volatility in equity markets.

Earlier this year, retail investors rallied to rally behind Gamestop stock, resulting in huge losses for new traders as the price plummeted following the initial excitement of the move.

In his report he said:
“Looking forward, we expect to continue to see a long period of risk for further – possibly significant – market corrections for institutional and retail investors and very high risks across the entire ESMA mandate.”

The report warned of the risks surrounding crypto assets, noting that crypto market capitalization fell almost 40% in May and also underlined the high price volatility.