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"

BitMEX Is 'Not Authorized to Operate in the UK, Says Country’s Financial Regulator

The U.K.’s Financial Conduct Authority (FCA), the country’s financial watchdog, has warned popular crypto derivatives trading platform BitMEX has been operating in the country without proper authorization.

According to a statement the regulator published, it is cautioning users who wish to deal with the platform and likened it to scammers, giving out tips on how to deal with these. The statements reads:

We believe this firm [BitMEX] has been providing financial services or products in the UK without our authorisation. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself from scammers.

Businesses offering financial products in the U.K. are required to register with the FCA, however the regulator notes some “act without our authorization and some knowingly run investment scams.”

It added BitMEX has been actively targeting people in the country, and since it isn’t registered with the FCA those who trade with it won’t have access to the Financial Ombudsman Service, which can resolve trading disputes, or to the Financial Services Compensation Scheme.

The FCA’s notice on BitMEX came shortly after it published one cryptocurrency exchange Kraken, although it promptly deleted that one. The move comes less than two months after the FCA revealed new rules for cryptocurrency businesses.

According to an official announcement published on January 10, the FCA has started monitoring for anti-money laundering and counter terrorist financing, The announcement reads:

We will proactively supervise firms’ compliance with the new regulations, and will take swift action where firms fall short of desired standards and cause risks to market integrity.

It’s worth noting that the FCA has last year proposed a ban on the sale of cryptoasset derivatives and exchange-traded notes (ETNs) to retail investors. In a press release on its website, the regulator revealed it considered the products “ill-suited” for investors who are “unable to reliable assess the value and risks of derivatives or ETNs that reference certain crypto-assets.”

Featured image via Pixabay.