Pablo Hernandez de Cos, head of the Bank of Spain, once again warned about cryptocurrencies and the growth the crypto market is experiencing. Hernandes de Cos noted that while the market is still relatively small worldwide, the cryptocurrency market was larger than subprime mortgages prior to the financial crisis of circa 2008, and its ties to traditional finance continue to grow.
Bank of Spain Governor Warns of Crypto Expansion
The head of the Bank of Spain has warned of the risks of allowing growing cryptocurrency markets to mingle with traditional financial institutions. In closing an event, Pablo Hernandez de Cos explained that the interconnection between these unregulated markets and traditional institutions has increased due to the large number of trading instruments launched during this latest bull market phase that includes ETFs, futures and mutual funds. .
In this sense, Hernandez De Cos said, “while some large private companies have publicly announced their interest in using crypto assets for cash management, others have campaigned for it.” This prompted the head of the Bank of Spain to issue warnings about the instability that such inclusion of crypto variables could have in Spain.
Market Growth and Dangers
The growth of the cryptocurrency market in Spain has been exponential, with some estimates putting a size of more than 60 billion euros ($64 billion) in crypto-related transactions. Referring to this, the head of the Bank of Spain said, “They should not lose sight of the fact that this market was larger than subprime mortgages before the global financial crisis.”
In addition, Hernandez de Cos explained that the trading volume of some of the most important assets such as bitcoin, ethereum and tether was close to the volumes traded by the New York Stock Exchange in some sessions. This, and the relative volatility of some crypto assets, made the governor believe that these markets should be regulated soon.
Hernandez de Cos explained:
We at the Financial Stability Board (FSB) have recently underlined that these markets can quickly reach a tipping point if not properly regulated and overseen.
This isn’t the first time the Bank of Spain has warned of crypto-related risks in traditional markets. In a report published in April, the institution also reported that the correlation between crypto and traditional markets and the rise of stablecoins could pose several risks to economic stability.
What do you think of the new warnings from the Spanish bank president regarding the growth of crypto markets? Let us know in the comment section below.
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