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The Bank of Spain urges consumers not to be blinded by cryptocurrencies

In the Banking Client Portal of the Bank of Spain (the central bank of this country) they published an article entitled “Cryptocurrencies: Do not be blinded” on January 28th.

As a warning, the publication noted, “In recent years, certain assets commonly known as virtual currencies or cryptocurrencies have proliferated worldwide, including Bitcoin, the most popular. These assets are not supported by a central bank or other government agency, and though they are presented as an alternative to money, their properties are very different “.

And they have listed the following characteristics that they attribute to cryptocurrencies:

  • Your acceptance as a means of payment is not mandatory

  • Its circulation is very limited

  • Their value fluctuates greatly, so that they cannot be regarded as a good store of value or a stable unit of account.

The Bank of Spain urges consumers not to be blinded by cryptocurrencies
The Bank of Spain urges consumers not to be blinded by cryptocurrencies

Whatever it is Keep in mind that there are thousands of cryptocurrencies, each with their own characteristics. In a way, it cannot be said that the three characteristics that they mentioned on the post of the Bank of Spain can be associated with every single cryptocurrency.

On the other hand, in the article on the banking portal mentioned above, they recalled that in 2018 the Bank of Spain and the CNMV warned consumers of the dangers that they could run in this type of investment by mentioning various risks, for example: “the extreme volatility of cryptocurrencies, which can even lead to the loss of all invested capital.”

The company later highlighted the following risks with clarification and suggestions:

“” Liquidity and volatility problems Extremes that cause strong price fluctuations. In addition, the reasons for their price fluctuations are not always transparent and could be manipulated. And keep in mind that if you need to get it back, for example, you might have trouble selling your investment.

High risk of losing your investment: Cryptocurrencies are very speculative investments.

Difficulties in ensuring consumer rights: No emission has been registered, approved or verified by any regulatory authority in Spain. So if you’ve bought cryptocurrencies, you don’t have the guarantees or protections that the standard offers for banking or investment products.

Problems arising from the cross-border nature: In many cases, the various actors involved in the issuance, custody and marketing of cryptocurrencies are not in Spain, so resolving a conflict may not be the responsibility of the Spanish authorities. “

Oddly enough, the text went further, specifying: “Remember that cryptocurrencies are complex investments that are far removed from the interests of small savers.”

Maybe … Does the Bank of Spain know what interests individual savers have?

A look for thought

In this context, Jesús Pérez Sánchez, Director of the Digital Assets Institute, gave his opinion – perhaps with a certain irony – on his LinkedIn account:

“What they publish is absolutely correct. Probably in 1999 the Bank of Spain published “Internet: Do not be blinded”:

1- If you introduce your card on websites, you could lose all of your money.

2- There are websites that post scams.

3- The connection is very limited, with little capacity, even to transfer videos.

4- Problems due to the cross-border nature of being able to buy things in countries that you cannot claim ”

And then he asked himself: “Should that be the message our institutions passed on to the internet industry in 1999? Would it have helped our country’s competitiveness? If the primary concern is to keep our citizens and businesses safe against any kind of risk, then this is certainly the right one. “

And other risks?

One might wonder, later, whether the Bank of Spain is also warning users about the risks of fiat money and the risks of being users, customers and often prisoners of the traditional financial and banking system.

And someone might also wonder if the Bank of Spain is making warnings reminding of the various crises around the world in which banks, governments and fiduciary funds have been protagonists.

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