The cryptocurrency industry is a volatile place, and most investors in this type of asset are already well aware of that. Most countries have already been proactive enough to establish regulations, while others have issued an outright ban. Considering that Spain still has no specific regulations on the matter, the Bank of Spain has decided to remind locals how risky the transactions of cryptocurrency are without regulations to protect them.
The notice to citizens was issued originally on February 10th, which they preceded with a blog post on February 8th to discuss the bank’s stance on cryptocurrencies and their role in the local economy. One of the main points made in these materials is that there is no legislation presently passed for cryptocurrency in Spain, which means two things – there is no legal supervision and there is no bank authorization. There are no protections for crypto platforms through the Deposit Guarantee Fund, according to the bank.
When cryptocurrency is used in a retail sense, there is no way for a consumer to establish their rights if something goes wrong, whether in the payment process or the item items. Furthermore, since there is nothing included regarding the status of whether cryptocurrency can be considered a legal tender, governor Pablo Hernández de Cos stated that crypto “cannot replace money and is not a means of payment or common exchange.” He’s even suggested that cryptocurrency completely change the name to virtual currency or crypto asset.
Right now, the actual definition of “cryptocurrency” is being debated as well. A directive in 2015 states that cryptocurrency is a digital representation of value, without which it cannot be supported by a bank as legal tender. Still, they can be exchanged and used in transactions. Even though the growth of this sector is recognized, there is no acknowledgment of the high cybersecurity risks, volatility, and lack of consumer rights.
In December, the Partido Popular said that there were a crypto and blockchain draft bill on regulations in the worlds. With this change, investors can have more certainty and may even be the subject of tax cuts to promote innovation.
Still, there is much work to be done. The market regulators have remained cautious. In the last month alone, 23 unauthorized forex and crypto-related entities were added to the National Securities Market Commission’s warning list.