Pablo Hernandez de Cos, governor of the Bank of Spain, has again warned about cryptocurrencies and the growth that the crypto market is experiencing. Hernandes de Cos stated that, while the market is still relatively small at a worldwide level, the cryptocurrency market is now bigger than subprime mortgages before the financial crisis circa 2008, and its links with traditional finance keep growing.
In this sense, Hernandez De Cos also stated that “some large private companies publicly announced their interest in using crypto assets for cash management, while others campaigned for it.” This has pushed the governor of the Bank of Spain to raise warnings about the instability that this inclusion of crypto variables might have in Spain.
The growth of the cryptocurrency market in Spain has been exponential, with some estimations giving it a size of more than 60 billion euros ($64 billion) in crypto-related transactions. The governor of the Bank of Spain also made reference to this, stating 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 explained that the trading volume of some of the most important assets, like bitcoin, ethereum, and tether, are already near the volumes traded by the New York Stock Exchange during some sessions. This and the relative volatility of some crypto assets have pushed the governor to believe that these markets need to be regulated soon.
Hernandez de Cos explained that:
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 is not the first time the Bank of Spain has warned about the risks associated with crypto in traditional markets. In a report issued in April, the institution also reported on how the correlation between crypto and traditional markets, and the rise of stablecoins might bring several risks to economic stability.
What do you think about the new warnings of the governor of the bank of Spain regarding the growth of crypto markets? Tell us in the comments section below.