ESMA Sounds Alarm on Fragile Financial Markets Amid Crypto Concerns
The European Securities and Markets Authority (ESMA) has issued a warning about the fragile state of financial markets. Despite a weakening economic outlook, investor optimism is driving high valuations, which could pose significant market risks.
According to ESMA Chair Verena Ross, high levels of operational risks are being driven by increasing cyber threats and advances in artificial intelligence that could be exploited to discover vulnerabilities across financial markets.
The regulator also highlighted concerns about potential shocks in crypto markets, which have growing ties with the broader financial landscape. The use of cryptocurrency in prediction markets complicates efforts to monitor and prevent illegal activities.
ESMA drew particular attention to the proliferation of incidents related to market manipulation and insider trading in these markets, which is indicative of burgeoning threats that warrant close scrutiny.