Banco de Espana, the Central Bank of Spain has cautioned its citizens against using Bitcoin, and other cryptocurrencies in general. According to the reserve bank, the highest risks posed to consumers through the use of these assets are in areas such as high volatility, cybersecurity, and difficulty to guarantee consumers’ rights.
Over 1500 Cryptocurrencies in the Market
Per a blog post, Banco de Espana outlined that there are over 1500 virtual currencies which as of September 2018 were able to move over $200,000 million in the market. They noted that the bank or government do not centrally control these assets, they have a global scope, and spread across the internet.
However, cryptocurrencies pose certain risks to consumers, and one of such is their high volatility. The bank noted that the frequent hike and dump in the value of these assets depend on the willingness of others to buy them. Also, their price is not transparent since it can be manipulated.
Risks Associated With Trading Virtual Currencies
In the area of cybersecurity, Banco de Espana was quick to note that when it comes to the security in cryptocurrency transactions, it is not the same with traditional methods of payment. In their opinion, there have been multiple incidents of robbery which were made possible through computer attacks.
Finally, the right of consumers is difficult to guarantee. An instance which was pointed out is the consumer’s inability to ask for a replacement if the goods or services did not meet their expectations. Also, consumer rights are not guaranteed in problems arising from payment with virtual currencies.
Bank Says Cryptocurrencies CANNOT Replace Money
In the bank’s opinion, virtual currencies cannot replace money. They also added that using the term “currencies” to refer to them is misleading because they are not commonly or generally accepted as a means of payment. In the same vein, there is currently no state which has accepted cryptocurrencies as a legal tender.
Banco de Espana also said no law in Spain has approved cryptocurrencies. The same is said about companies in the crypto industry which are not regulated in the country’s legal system. Also, these companies are not subject to “deposit guarantee systems such as the Deposit Guarantee Fund.” Thus, these companies have not been authorized by the Bank of Spain.
Entities in Spain Adopt Blockchain Technology
While the bank has made these comments, entities in the country have taken steps to adopt the blockchain. BTCNN on December 14, 2018, reported of Banco Bilbao Vizcaya Argentaria (BBVA), a major Spanish Bank issued a €150 million loan using blockchain technology.