Pablo Hernandez de Cos, Governor of the Bank of Spain, again warned about the growth that cryptocurrencies and crypto markets are experiencing.Hernandes de Cos said that although the market is still relatively small at the global level is still relatively small, the cryptocurrency market is now larger than subprime mortgages before the financial crisis circa 2008, and its connection to traditional finance continues to grow, he said.
Bank of Spain Governor Warns of Crypto Expansion
The Bank of Spain Governor warnedabout the risks of mixing the growing cryptocurrency market with traditional financial institutions. While closing the event, Pablo Hernandez de Cos explained that the interconnection between these unregulated markets and traditional institutions is increasing due to the large number of trading instruments launched in this last bull market phase, including ETFs, futures and investment funds.
In this sense, Hernandez De Cos also stated that “some large private companies have professed interest in using crypto assets for cash management and others are campaigning for it.” This has pushed the Governor of the Bank of Spain to issue a warning about the instability that the inclusion of this crypto variable may have in Spain.
Market Growth and its Dangers
The growth of the cryptocurrency market in Spain has been exponential, with some estimates putting it at over €60 billion in crypto-related transactions. The Governor of the Bank of Spain also noted this, saying, “We must not overlook the fact that this market is already larger than subprime mortgages before the global financial crisis.”
In addition, Hernandez de Coss explained that the trading volume of the most important assets, such as Bitcoin, Ethereum, and Tether, is already close to that of the New York Stock Exchange in some sessions. This and the relative volatility of some crypto assets has pushed the Governor to believe that these markets need to be regulated soon.
Hernandez de Cos explained that.
We, the Financial Stability Board (FSB), recently emphasized that if not properly regulated and supervised, these markets could soon reach a tipping point.
This is not the first time that the Bank of Spain has warned about the risks associated with crypto in traditional markets; in a report issued in April, the institution also noted the correlation between crypto and traditional markets, and that the increase in stable coins could pose some economic stability risks, the report stated.
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