The Bank of Spain Wants To Keep A Close Eye On The Cryptocurrency Market.

The governor of the Bank of Spain, Pablo Hernández de Cos, has urged the country’s government to step up surveillance, regulation, and oversight of the cryptocurrency market.

According to Hernández de Cos, the Bank of Spain needs to manage the risk posed by the most popular cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH); stablecoins, such as Tether (USDT); and other decentralized services, such as the Decentralized Finance (DeFi) sector.

In his address at the II Observatory of Finance on February 21, Hernández called for more coordination at the national and international levels, as well as across institutions, to ensure monitoring and continued development of the crypto sector regulation.

During his speech, he addressed some of the benefits that cryptocurrencies have for the financial sector, such as their capacity to improve payment systems or act as a catalyst for new capabilities.

He did, however, emphasize the risks they pose to the financial system and, as a result, to the banking sector’s clients.

Furthermore, the central bank’s governor worries that ‘bitcoinization’ or ‘cryptoization’ threatens to develop rival value transfer circuits since they are not within the bank’s supervision, as he stated:

“They are not subject to the control of central banks, which limits their ability to contain the materialization of possible systemic risks.”

As a result of all of these circumstances, the governor feels it is critical that the National Securities Market Commission (Comisión Nacional del Mercado de Valores) execute a new proposal, which entered into effect on February 17, that regulates the advertising of cryptocurrency assets in Spain. Hernández de Cos said:

“This regulation emphasizes precisely the risks associated with these markets, including the possible total loss of the amount invested,”

Finally, he believes that Spain’s public authorities should speed up their monitoring efforts, adding that the bank’s current plans foresee granting privileged space to specific types of crypto assets in the next months in order to prevent fraud.

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