Pablo Hernández de Cos warned the public regarding the risk involved with mixing traditional banking and crypto-assets. The governor had the chance to express his opinion during the inauguration of the second Finance Observatory event which analyzes the state of financial and insurance sectors, as reported by the local news on the 24th of February.
The governor stated his opinion and viewpoint on the matter. He said that though the exposure is at the moment not very significant, it’s definitely on a constant rise owing to the fact that crypto services are being integrated within these platforms.
He also touched on the expansion of third-party crypto products and services, and how they oblige banks to lend to crypto organizations which is another cause of integration between the 2.
The increase of banks and crypto-assets sector in a direct and indirect fashion would also serve to increase their equity and reputational risks, as well.
When touching on the topic of stablecoins, he referred to them as crypto assets that are indeed competing with banks and financial institutions, since they’re tethered to fiat currencies, as well as the ability to be a store of value.
Volatility could, in the coming times, cause a ton of stress to the money markets and end up affecting the custodians of the hedge assets.
The cryptoization of an entire nation would according to the governor, be the most severe effect of crypto adoption, which would render the country’s ability to manage monetary policies incapacitated.
Furthermore, this would go on to cripple the monetary autonomy as well as the capacity to control international capital inflows as well.
Also, the scale of this size of adoption would end up adversely affecting the capacity of regulators to successfully enforce the anti-money laundering act because of the usage of these tools.
The Bank of Spain opened the mandatory registry for Virtual Asset Service Providers, or VASPs, back in October 2021 within the country. Under it, all institutions and persons had to mandatorily apply for the registry should they want to provide any crypto-related services in Spain.