At the ESADE Master closing ceremony on May 31, Governor of the Bank of Spain Pablo Hernandez de Cos issued another warning about the crypto market’s risks. He remarked that the crypto industry is still relatively tiny on a global scale. However, it is currently larger than subprime mortgages before the 2008 financial crisis. He added that the crypto market’s links with traditional finance are developing.
The Bank of Spain’s governor has warned of the risk of enabling cryptocurrency markets to connect with traditional financial institutions. Pablo Hernandez de Cos noted that the relationship between these unregulated markets and established institutions has developed as a result of the large number of trading instruments launched during the last bull market phase, such as ETFs, futures, and investment funds.
He added:
“Some large private companies publicly announced their interest in using crypto assets for cash management, while others campaigned for it.”
The Governor of the Bank of Spain also warns about the potential for instability in Spain as a result of the inclusion of crypto variables. The development of the crypto market in Spain has been outstanding, with certain assessments providing it with a size of in excess of 60 billion euros ($64 billion) in crypto-related exchanges. He also emphasised that they “must not overlook the fact that this market is already larger than that for subprime mortgages in the run-up to the global financial crisis.”
Furthermore, Hernandez de Cos stated that the trading volume of some of the most prominent assets, including bitcoin, ethereum, and tether, is already approaching that of the New York Stock Exchange during some sessions. This, combined with the relative volatility of some crypto assets, has led the governor to conclude that these markets must be controlled as quickly as possible.
As Hernandez de Cos explained:
“We at the Financial Stability Board (FSB) have recently underlined that, if not properly regulated and supervised, these markets could quickly reach a tipping point.”
This isn’t the first time the Bank of Spain has talked about the risk related to crypto in traditional business sectors. According to the report published in April, the establishment likewise covered how the relationship between the crypto and customary business sectors and the ascent of stablecoins could carry a few dangers to financial security.
Read more:
Binance more likely to shut crypto derivatives business in Spain
