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Bank of Spain

Bank Of Spain Governor Highlights Need For Fast Regulation In Defi And Crypto

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Bank Of Spain Governor Highlights Need For Fast Regulation In Defi And Crypto

Pablo Hernández de Cos, governor of the Bank of Spain and chair of the Basel Committee on Banking Supervision, explained that the cryptocurrency space and decentralized finance (defi) need to be regulated swiftly to avoid risks of financial instability. Hernandez de Cos also mentioned how this swift approach should bring the crypto financial system into the scope of regulation before it grows bigger.

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Governor of Bank of Spain Talks Crypto Regulation

The governor of the Bank of Spain, Pablo Hernández de Cos, who is also part of the banking supervision Basel Committee, explained his take on how he thinks cryptocurrency regulation should be addressed. In a keynote offered at the 36th annual general meeting of the International Swaps and Derivatives Association, Hernández de Cos explained that there needs to be a swift move to regulate cryptocurrency and decentralized finance markets before they can grow to affect the financial stability of the economic system.

On this issue, he stated:

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Despite this phenomenal growth, cryptoassets still represent only about 1% of total global financial assets, and banks’ direct exposures are relatively limited to date. Yet we know that such markets have the potential to scale up rapidly and pose risks to individual banks and overall financial stability.

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Furthermore, the governor recommended a “proactive and forward-looking regulatory and supervisory approach” to the subject, declaring that there can be a balance between welcoming these technologies and also mitigating their risks.

Criticizing Crypto and Defi

Hernández de Cos also took the opportunity to criticize the current state of the cryptocurrency market, citing the crypto fever meme currencies like dogecoin caused in the crypto crowd and the effect that Elon Musk’s thoughts can have on these markets. He remarked:

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How many $3 trillion asset classes exhibit wild swings in valuations based on seemingly odd events, such as tweets published on 20 April or Saturday Night Live skits?

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To him, these are clear signs that the market is not so decentralized as it aims to be, and that traits such as “robustness” or “stability” cannot be attributed to cryptocurrencies.

This is not the first time that the Governor of the Bank of Spain has talked about the dangers of introducing traditional financial institutions to cryptocurrencies. Back in February, Hernandez de Cos also warned about this issue, stating that an increase in the exposure of private banks to crypto could introduce new equity and reputational risks.

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What do you think about the statements of Bank of Spain Governor Pablo Hernández de Cos? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Bank of Spain

Spanish Securities Regulator Orders Binance To Stop Offering Cryptocurrency Derivatives

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Spanish Securities Regulator Orders Binance To Stop Offering Cryptocurrency Derivatives

The Spanish securities regulator, the CNMV, has ordered Binance to stop offering cryptocurrency derivative products to customers in the country. According to local media, the crypto exchange giant has followed the orders of the regulator, withdrawing these products from its customers in Spain.

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Spanish Securities Regulator Sets Eyes on Binance

The CNMV, which is the Spanish securities regulator, is putting more pressure on exchanges offering cryptocurrency-linked derivatives in the country. Binance, one of the biggest exchanges in the world by volume traded, has been required to drop the offer of cryptocurrency-related derivatives, like futures contracts, for customers in the country, according to local media.

The purpose of the measure is ostensibly to protect investors using such products as investment tools. The regulator warned last year about the danger of derivatives, stating they increase the complexity of trading operations, and also can cause investors to lose even more than the initial investment capital.

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Binance has reportedly withdrawn all of its derivatives offerings from its investments page for Spanish users, preventing them from opening new operations. However, the operations that were already open are being maintained in the same state, as the exchange awaits more feedback from the regulator.

Gray List

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Binance is following the orders of the Spanish regulator as a way of getting the needed permits to establish its operations in the country. Currently, the exchange is in regulatory limbo, being mentioned in a gray list that was published last year with several cryptocurrency exchanges that also operate in Spain. However, Binance has been in talks with the CNMV to get out of this current state and get approval from the Bank of Spain.

The exchange has been in talks to get licenses from the Bank of Spain and the securities regulator since January, but there has not been a positive answer from either as of writing. At the time, Alberto Ortiz, country manager of Binance in Spain, declared:

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By joining the Bank of Spain registry we hope to encourage other firms to do the same.

However, other exchanges have already been greenlighted by the Bank of Spain. Bit2me, a local exchange, was the first one to receive this license, and others have followed since.

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What do you think about the restriction imposed by the CNMV on Binance in Spain? Tell us in the comments section below.

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Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Bank of Spain

Bank Of Spain Report Warns About Cryptocurrency Usage And Its Effect On Financial Stability

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Bank Of Spain Report Warns About Cryptocurrency Usage And Its Effect On Financial Stability

The Bank of Spain has issued a new report that touches on the subject of the popularity of cryptocurrency usage and the possible effects it might have on the financial stability of the nation. In the document, the bank explains that these assets — which ostensibly don’t have any kind of support behind them — can introduce systemic risks via their adoption by traditional institutions and the lack of regulation over them.

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Crypto Assets Could Cause Systemic Risks According to the Bank of Spain

The Bank of Spain has issued a new report where it warns about the growth of the cryptocurrency economy and its possible effects on the traditional economic system. According to the report, while the cryptocurrency market is still considered limited, its exponential growth and the fact that most of the value of the market comes from cryptocurrency assets without support, could pose risks for the global economy.

This “systemic risk” is explained by the growing links between crypto and the traditional economy. On this, the Bank of Spain identifies two possible vectors. The first one has to do with the elevated volatility of these assets and their correlation with traditional markets. On this, the document informs:

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The high volatility of crypto assets may contribute to these dynamics, with corrections in these assets favoring a more general correction in financial asset prices.

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The second risk vector has to do with the elevated market cap of traditional stablecoins like USDT and USDC, which forces their issuers to maintain a high number of support assets. This might affect the prices of these “safe” assets in the case of an accelerated run caused by market conditions.

Regulation Still Not There

The report continues to explain that, while these cryptocurrency assets pose significant risks for the global economy, regulation is still being established and has failed to address these concerns comprehensively. Spain does not have the ability to regulate cryptocurrencies and has just recently issued a set of rules and recommendations when it comes to advertising campaigns related to these elements.

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The document clarifies that:

In this context of lack of its own national regulation on crypto assets, the Bank of Spain does not currently have the capacity to regulate, authorize or supervise the operation of crypto asset markets or their participants.

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Spain and others in the E.U. are waiting for the approval of MiCA, the Markets in Crypto Assets law framework, which according to recent reports, will designate supranational entities to oversee cryptocurrency operations in Europe.

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What do you think about the latest report on the risks that cryptocurrencies present to the global economy issued by the Bank of Spain? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Bank of Spain

Bank Of Spain Reminds Public Cryptocurrency Purchases Can Be Blocked In Certain Cases

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Bank Of Spain Reminds Public Cryptocurrency Purchases Can Be Blocked In Certain Cases

The Spanish central bank, Bank of Spain, has warned users about certain actions banks can take if they detect cryptocurrency purchases. In a post published on its web page, the institution explains that traditional banks have the ability to block these transactions if they suspect there are suspicious circumstances involved, such as those related to identity theft or money laundering.

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Bank of Spain Explains Crypto-Related Account Restrictions

The Bank of Spain has issued a post explaining to users the potential actions that commercial banks can take when detecting a cryptocurrency-related purchase. First and foremost, the bank explains that according to Spanish and European supervisors, these assets are not fit as payment methods or investment vehicles.

The bank also explains that accounts can be blocked as a result of suspicious behavior associated with identity theft. It explained:

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It may happen that the bank has suspicions that identity theft with credential theft is taking place. There are frequent cases of fraud in which there is fraudulent access to the accounts of the clients of an entity after having stolen their passwords from the client, and which end in a transfer to acquire cryptocurrencies.

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This might trigger alarms integrated into the banking system and prompt the aforementioned block to protect the customer.

Money Laundering

However, there are other reasons that might prompt a transaction restriction. The post goes on to explain that clues linking funds transacted with money laundering can also cause the block of a cryptocurrency purchase transaction. In this sense, the bank clarified:

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It may also happen that the bank classifies this type of operation as high risk and decides to require additional controls, such as making a phone call or asking you to come to the branch.

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Banks must comply with a series of laws that prevent them from incurring these kinds of transactions that might be used to launder funds or could be used to finance terrorism around the world. However, it was also explained that banks cannot do this without maintaining a line of communication with the affected user, giving a general reason for the block of the transaction. In some cases users may be asked to visit a bank branch. However, the post says banks are to remain flexible depending on the health status of the customer and the distance from their residence.

Europe is currently drafting MiCA, the Markets in Crypto Assets regulatory framework, that will better clarify the attributions of each one of the organizations regarding cryptocurrency and its associated actors.

What do you think about the warning of the Bank of Spain on cryptocurrency purchases? Tell us in the comments section below.

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Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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