The deputy governor of Spain’s Central Bank Margarita Delgado has expressed concern regarding the continued use of crypto in the country. Delgado made her sentiments known during an event hosted by PWC.
Details of Delgado’s Speech
During her speech at the event called “A climate of change,” the deputy governor of the Bank of Spain stated that there were enormous risks that came with trading crypto. In her opinion, crypto poses a huge risk to financial stability if the sector is not properly regulated.
According to Delgado, one of the main risks is that there is a general lack of knowledge regarding the basic characteristics of crypto. She also noted that there was a contagion effect in other markets due to their high volatility. She also noted that there was the risk of over-leveraging, which sometimes led to non-payment due to the opacity of some segments of the crypto sector. Delgado singled out decentralized finance for carrying an exceptionally high operation risk.
Impact on Traditional Banking
Delgado raised alarm over the risk that the crypto sector posed to the mainstream banking service. According to the deputy governor, this was because some firms were offering services both in the traditional financial world and the crypto world. One effect, according to her, would be increased reputational risk. The Bank of Spain has already raised alarm regarding crypto services offered by traditional banks in the country. In the central bank’s opinion, it would introduce new risks to the banking sector.
Growing Crypto Ownership In Spain
During her speech, Delgado noted that around 12% of the Spanish population owned crypto. In the deputy governor’s opinion, it was important to check whether these people were fully aware of the risks they exposed themselves to, or if they were investing in it with unrealistic expectations. She pointed out that, unlike the banking sector, crypto was not subject to strict supervision. As a result, there were no protection mechanisms as enjoyed by those using the mainstream financial sector.
Will Spain Ban Crypto?
Despite the sentiments expressed by the deputy governor, there is no indication that the central bank of Spain plans to ban crypto. However, Spanish regulators have been getting more active when it comes to regulating the crypto sector. For instance, in January this year, Spain introduced new rules regarding crypto ads. According to the rules, anyone with over 100K followers on social media had to file a prior report before promoting a crypto project. Failure to do so could attract a fine of over $340K.
Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however, no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the cryptocurrency they discuss. The information and content are subject to change without notice. Visionary Financial and its affiliates do not provide investment, tax, legal, or accounting advice.