Spanish Bank BBVA Issues $150M Loan Using Ethereum

  • BBVA, the 35 billion euro bank from Spain, has officially issued a loan using the Ethereum blockchain.
  • In a test of their pilot loan program, BBVA teamed up with MUFG and BNP Paribas to lend funds to Spain’s national electric company, Red Electrica.

Spanish bank BBVA has officially issued a loan via the Ethereum blockchain. As reported by Finance Magnates, BBVA, Spain’s second-largest bank, is working on a pilot program that will issue loans using Ethereum (ETH). In the recently issued loan, Spain’s national electricity company, Red Electrica, received funding from BBVA.

This transaction represents the first real-world use of BBVA’s pilot program, and was no small test.

It is reported that the loan was valued at $150M, although it’s unclear how much was transacted using ETH. BBVA also hasn’t disclosed what currency was used to transact. The report also does not include whether it was ETH or something with less volatility, such as a stablecoin.

BBVA’s loan was what is referred to as a syndicated loan. A syndicated loan is one that splits up one borrower between multiple lenders. This allows the borrower to borrow larger amounts, while also reducing risk by spreading the loan through different lenders.

In this case, the three lenders are BBVA, MUFG (Japan), and BNP Paribas (France), and all three banks have shown interest in using blockchain technology. Previously, MUFG (the fourth largest bank in the world) has researched using their own cryptocurrency, while BNP has been in talks looking to build their own blockchain. 

The Future Of Finance?

This example shows the benefits to using cryptocurrency over traditional systems. According to BBVA, the current loan system (which is valued at 4.6 trillion euros), takes weeks to process transactions. Ethereum transactions, on the other hand, can be completed within hours.

Blockchain tech has also been touted as a great way to store signatures and contract terms, all time-stamped by which block they were included in. This means that ETH transactions can be referenced forever, whenever lenders or borrowers want to double-check the details of their loan. This could mean reduced costs and increased security for the issuance of loans:

Everything is automatically recorded by the system, in terms of back office and operational costs.

Ricardo Laiseca, Head of Global Finance, BBVA

Chinese Yuan 'Inversely Correlated' with Bitcoin, Amidst US-China Trade Wars

Since January 2018, China and the US have been involved in an intense trade war in which both countries have significantly increased tariffs on imported goods and services.

Due partly to the rising tension between the two countries, the Chinese yuan (CNY) has been losing value against the USD. During the same time period, the price of bitcoin (BTC) and other major cryptoassets has been surging.

As noted by the South China Morning Post (SCMP), the value of BTC, the world’s most dominant cryptocurrency, increased by 26.5% to $7,878 during the time period from May 5 to May 17. Notably, US President Donald Trump had announced on May 5 that he would further increase tariffs on goods imported from mainland China.

Chinese Yuan Weakens as Nation’s Government Responds to Increased Tariffs

The SCMP pointed out that the yuan dropped to its lowest level since the past six months after the Chinese government responded to Trump administration’s decision to impose higher tariffs on China.

Commenting on the price fluctuations of both the yuan and bitcoin, Garrick Hileman, a Macroeconomics Researcher at London School of Economics (LSE) and Head of Research at, remarked:

We are observing a strong inverse correlation between the [Renminbi] RMB’s value and bitcoin, meaning that recent RMB declines over trade tensions have been closely matched by increases in the value of bitcoin.

“Correlation Does Not Necessarily Equal Causation”

Hileman also mentioned that we “cannot be 100% certain” that the bitcoin price has been increasing due to heightened concerns regarding trade tensions and the corresponding decline in the value of the yuan. The blockchain researcher stated:

Trade tensions and declines in the RMB’s exchange rate as correlation does not necessarily equal causation.

Hileman, who earned his Phd from LSE, revealed:

This is not the first time we’ve seen significant increases in the value of bitcoin taking place alongside yuan concerns.

He added that there’s “growing recognition of bitcoin as ‘digital gold’ and it being used as a hedge against various macroeconomic risks.”

“This Year, the Narrative Is Bitcoin, Bitcoin, Bitcoin”

According to the SCMP, bitcoin’s price may have surged recently due to the generally positive remarks made about it at the Consensus 2019 conference.

Meltem Demirors, the Chief Strategy Officer at CoinShares, a crypto treasury management firm, has also confirmed recently that the narrative this year has been mostly about Bitcoin. Demirors revealed that both institutions and retail investors are “feeling good” and are “more confident” about the long-term potential of Bitcoin and the evolving ecosystem that supports it.