Hernández de Cos claims “step up regulation and supervision of crypto assets”

The crypto assets they have become one of the main headaches for central banks. Its lack of control and accountability to customers and its effect on the financial market have led for the authorities to take action on the matter. In fact, the governor of the Bank of Spain, Pablo Hernandez de Kosconsiders that “public authorities are obliged to intensify the monitoring, regulation and supervision of the cryptoactive market, which includes an alert and constant information to users of the risks associated” with their use.

The governor has expressed his concern about a phenomenon that can have important ramifications in the banking sector, and that is growing exponentially. The most representative crypto-values ​​(bitcoins, ethers, tethers, among others) “have registered, at times, a trading volume comparable to that of the New York Stock Exchangewith a range between 70% and 95% of this, and its aggregate capitalization has reached 3 trillion dollars, three times higher than the previous historical maximum corresponding to the 2017 financial year.”

But these increases are also associated with “high volatility, as evidenced by the accumulation of value losses close to 40%.

Pablo Hernández de Cos, Governor of the Bank of Spain

All this in a framework, considers Hernández de Cos, with numerous risks. “The existence of large swings in the prices of these assets can alter investor sentiment, causing an overreaction that ends up spilling over into other trading environments,” he explained. “The need for respond to volatility Frequently adjusting collateral could also accentuate sales of other asset classes.

In fact, “recently the IMF warned about an appreciable increase in the positive correlation between the cryptoactive and capital markets that, in some cases, it has been multiplied by 35.

The Governor of the Bank of Spain addressed these issues during the inauguration of the II Finance Observatory, organized by El Español and Invertia. In his intervention, to the aforementioned risks he has added that crypto assets “constitute a new factor of competition around the transactional services of the” banking sector, for which the “Both patrimonial and reputational risks.

also concerned the lack of transparency of these products and their use for the user. For this reason, he is highlighted the regulation by the CNMV of the crypto assets advertising and the initiatives that are being launched on an international scale. “Our work agendas already contemplate granting a privileged space in the coming months, for example, to the decentralized finance or non-fungible tokens.

However, collaboration between regulatory entities is essential. “This work, to be effective and efficient, must be carried out with very close cooperation, both international and inter-institutional, in order to avoid fragmentation and arbitration that, ultimately, would lead to a insufficient mitigation of the risks and vulnerabilities associated with these markets.
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