The ECB flagged multiple vulnerabilities, from rising institutional exposure to Bitcoin’s mounting security risks to critical data blind spots that make it difficult to assess crypto’s systemic threat fully.

For now, the ECB says risks to financial stability remain limited—but that may not last.

Rising Valuations, Rising Risk

As Bitcoin’s price hits record highs and market participation swells, so too does the risk of sharp, widespread losses.

The ECB noted that increasing exposure, particularly via exchange-traded products and regulated futures, could amplify the damage of a sudden correction, spilling over into the broader financial system.

Bitcoin’s share of the total crypto market has jumped from 40% in 2022 to more than 60% in 2025, driven by regulated financial products and institutional adoption.

Despite this, the ECB emphasized that Bitcoin remains twice as volatile as gold and nearly three times more volatile than the S&P 500.

Some institutions treat Bitcoin as a diversification tool, but the ECB said its correlation with risky assets like tech stocks suggests it offers little true diversification during market stress.

Mining Costs Pose a New Threat

The ECB also flagged growing concerns over Bitcoin’s security model.

The network’s integrity depends on a wide base of miners, but soaring operational costs and shrinking rewards, especially following the 2024 halving, could push smaller miners out of the market.

A thinner miner base may expose the network to attacks or manipulation, the ECB warned.

If crypto continues to integrate into traditional finance, such security vulnerabilities could pose serious financial stability risks.

Growing Retail Interest, Modest So Far

In the euro area, direct household exposure to crypto remains relatively low.

About 9.7% of households own crypto, and most hold under €1,000 worth.

Still, interest is growing. Over half of current owners plan to buy more, and 10% of non-owners say they intend to invest.

“This growing interest could increase future wealth risks,” the ECB wrote, emphasizing the need for more granular data on who owns what, and how much.

Data Gaps Obscure True Scale of Risk

What troubles the ECB most is what regulators can’t see.

Significant data gaps remain around non-bank financial institutions and leverage in crypto markets, making it harder to monitor and mitigate potential contagion risks.

These blind spots could conceal vulnerabilities capable of spilling into the broader systems, especially as crypto becomes more intertwined with traditional finance.

“Significant data gaps hinder monitoring and assessing these contagion risks, especially regarding exposures in the less-regulated non-bank financial sector and leverage use,” the ECB said.

Europe’s Tight Rules Aren’t Enough—Global Gaps Remain

The ECB acknowledged that the EU’s Markets in Crypto-Assets (MiCA) framework has brought stronger oversight to the region.

However, crypto is global, and regulation remains fragmented.

That opens the door to regulatory arbitrage, undermining the EU’s defenses and increasing the risk of cross-border contagion.

The ECB urged global regulators to implement the G20’s crypto roadmap, including recommendations from the Financial Stability Board and the Basel Committee, to close loopholes and protect financial stability worldwide.

For now, crypto may not pose an existential risk to Europe’s financial system, but the walls are thinner than they seem.

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