The Governor of the Bank of Spain, Pablo Hernández de Cos, has again warned about the development of cryptocurrencies and the crypto market. Hernandes de Cos said that, while the worldwide market is still relatively small, the cryptocurrency market is now larger than subprime mortgages prior to the 2008 financial crisis, and its relationship with traditional finance continues to grow.
Bank of Spain Governor Warns About Expanding Crypto
The governor of the Bank of Spain has warned about the risks of mixing burgeoning cryptocurrency markets with traditional financial institutions. Closing an event, Pablo Hernández de Cos explained that the interrelationship between these unregulated markets and traditional institutions has increased due to the launch of a large number of trading instruments during this final bull market phase, including ETFs, futures and Includes investment funds. ,
In this sense, Hernández de Cos also stated that “some large private companies publicly declared their interest in using crypto assets for cash management, while others campaigned for it.” This has prompted the governor of the Bank of Spain to warn about the volatility that the inclusion of crypto variables could cause in Spain.
Market development and its dangers
The growth of the cryptocurrency market in Spain has been exponential, with some estimates putting it at over 60 billion euros ($64 billion) in crypto-related transactions. The Governor of the Bank of Spain also noted that he “should not overlook the fact that this market is already large enough for subprime mortgages due to the global financial crisis.”
Furthermore, Hernandez de Cos explained that the trading volumes of some of the most important assets such as Bitcoin, Ethereum and Tether are already close to the volumes traded by the New York Stock Exchange over the course of a few sessions. This and the relative volatility of some crypto assets have led the governor to believe that these markets need to be regulated soon.
Hernandez de Cos explained that:
We at the Financial Stability Board (FSB) have recently highlighted that if not properly regulated and supervised, these markets can quickly reach a critical point.
This is not the first time the Bank of Spain has warned about the risks associated with crypto in traditional markets. In a report released in April, the institution also explained how the relationship between crypto and traditional markets, and the rise of stablecoins, could bring several risks to economic stability.
What do you think about the new warnings from the Governor of the Bank of Spain regarding the development of crypto markets? Tell us in the comments section below.
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