Governor Pablo Hernandez de Cos, of the Bank of Spain, has urged authorities to heighten monitoring regulation and supervision of the cryptocurrency market. He highlighted that this is essential to manage the threat presented by major cryptocurrencies such as bitcoin, Ethereum, and Tether (UDST), as well as the decentralized finance sector.
Hernandez, in his address at the II Observatory of Finance on February 21, called for more collaboration at the national and international levels. He said institutions must ensure oversight and develop regulation of the crypto sector.
The governor highlighted some of the advantages that cryptocurrencies have for the financial industry. He outlined crypto’s ability to enhance payment systems and act as a catalyst for new capabilities. Hernandez also pointed out the dangers digital assets represent to the financial system and to the customers within the banking system.
Spain’s central bank sees bitcoinization or cryptoization as a threat to the parallel value transfer circuits. Hernandez said cryptocurrencies are not subjected to the bank’s control. It limits their ability to contain the materialization of possible systemic risks. As such, the governor believes the National Securities Market Commission should implement a new initiative in an effort to control the advertisement of cryptocurrency assets in Spain.
Hernandez said the regulation emphasizes the risks associated with the markets, including the total loss of the invested amount. Spain’s respective authorities need to step up their efforts as watchdogs.