Governor of Bank of Spain on Cryptocurrencies: “More Risk Than Benefits”

Avi Rosten
  • The head of Spain's central bank expressed his caution about cryptocurrencies yesterday
  • Talking at an event organised by Deloitte, Mr. Linde nonetheless was positive about blockchain technology

The governor of the bank of Spain, Luis María Linde, has suggested a cautious approach to cryptocurrencies, but says he still sees value in the underlying blockchain technology.

According to a local media report, the central bank chief - talking at an event yesterday organised by Deloitte - said that cryptocurrencies “present more risks than benefits,” remarking that digital currencies:

"have low acceptance as a means of payment, suffer extreme volatility, present multiple operational vulnerabilities and have been related to fraudulent or illicit activities in many cases."

Luis María Linde

Nonetheless, Linde sees substantial potential for blockchain technology more generally in the financial services sector.

Although he thinks that the technology is still “not quite mature,” he sees the benefits of distributed ledgers in that they can increase efficiency and reduce costs.

Linde also commented more generally that moving to a more digital economy carries risks of “greater cyber threats” and therefore the need for “new measures to protect processes, assets and customer data."

Mixed Regulatory Environment

These latest comments come at a time when jurisdictions around the world are rapidly having to make clear their stance towards cryptocurrency and blockchain.

Moves by nations such as Poland - who last week put their banking records on the blockchain, and the Marshall Islands - on Tuesday signing their own national sovereign cryptocurrency into law, contrast strongly with the attitudes of states such as India and Zimbabwe - both of whom recently banned insitutional crypto trading.

 

Featured Image Credit: "Banco de España (Bank of Spain)" by "Jorge Láscar" via Flickr; licensed under "CC BY 2.0"

Libra Association Members Consider Quitting Due to Government Pressure

Neil Dennis

Three founding members of the Libra Association, the cryptocurrency project announced by Facebook earlier this year, are considering withdrawing from the group following government and regulatory opposition.

A report in the Financial Times on Friday suggested that two - unnamed - members of the Association are discussing their "right next steps". A further member - also unnamed - was reportedly concerned that its support for the project will raise regulatory scrutiny of its own business.

Founding Members

Among the 28 founding members are payments firms PayPal and Visa, internet marketplaces eBay and Booking Holdings, blockchain groups Coinbase and Xapo, and venture capitalists Andreessen Horowitz and Thrive Capital.

One of the partners told the FT:

Some of those conversations [about regulation] should have taken place before the launch, to understand how regulators would think about this, so there wasn’t so much pushback.

The backlash has not just been regulatory. Central banks are concerned about the impact on monetary policy, while governments have an obligation to protect their sovereign currencies. Indeed, such has been the furore over Libra that Facebook admitted on July 31 that the cryptoasset may never be launched.