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The Bank of Spain has issued a warning about the dangers of using unregulated cryptocurrency in the country for an extended period of time

Margarita Delgado, the deputy governor of the Bank of Spain, has expressed her views on the use of cryptocurrencies and how they may damage the country’s economy. The remarks were made at a speech delivered at an event named “a climate of change” organized by the multinational professional services network PWC, which focused on the changing character of the financial sector.

The deputy governor warned that the widespread usage of cryptocurrencies poses a number of systemic dangers, including the overall lack of information among those who utilize these assets.

The mystery associated with the decentralized finance segment, which can lead to over-leveraging and payment issues, is one of the main hazards. Delgado elaborated on the potential effects of the crypto market on other markets:

“Its high volatility can have a contagious effect on other markets, due to the panic and”
“overreaction that can be transferred to other trading environments.”

Delgado also mentioned the impact of investing in and storing bitcoin assets on traditional banking, citing the growth of a mixed industry that provides both services to its customers. The assets’ implementation, she said, would result in a “significant increase in patrimonial and reputational concerns.”

When it comes to traditional banks offering cryptocurrency-based services to customers, the Bank of Spain has previously raised concerns. In February, the governor of the Bank of Spain spoke against the hazards of this association at the II Finance Observatory, noting that exposure to cryptocurrency assets would introduce new risks to the banking industry.

Finally, Delgado thinks that 12% of Spaniards own cryptocurrency, implying that this type of discussion is necessary in order for them to gain a full understanding of the crypto landscape. She came to the following conclusion:

“It would be necessary to check whether these investors are fully aware of the risks to which”
“they are exposed or have simply been pushed by expectations of extremely high revaluations.”

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Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.