Bank of Spain Governor Highlights Need for Fast Regulation in Defi and Crypto

Bank of Spain Governor Highlights Need for Fast Regulation in Defi and Crypto – Pablo Hernández de Cos, the governor of the Bank of Spain and a member of the Basel Committee on Banking Supervision, detailed how he feels cryptocurrency regulation should be handled.

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Hernández de Cos, speaking at the 36th annual general meeting of the International Swaps and Derivatives Association, said that cryptocurrencies and decentralized finance markets must be regulated quickly before they may threaten the financial stability of the economy.

Also Read: UAE’s Emirates Airline Set to Use Bitcoin as a Payment Service

On the subject, he stated:

“Cryptoassets still account for less than 1% of total global financial assets, despite this meteoric rise, and institutions’ direct exposure is still limited. We also know that such markets have the potential to grow quickly, posing hazards to individual institutions as well as overall financial stability.”

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In addition, the governor advocated for a “proactive and forward-looking regulatory and supervisory approach” to the issue, claiming that there can be a balance struck between adopting modern innovations while also minimizing their risks.

Hernández de Cos also used the occasion to question the current status of the cryptocurrency market, pointing to the crypto fever caused by meme currencies like Dogecoin, as well as the impact that Elon Musk’s opinions can have on these markets. 

He stated:

“How many of the $3 trillion asset classes see large price movements in response to seemingly random occurrences like tweets written on April 20th or Saturday Night Live skits?”

These are clear indicators, according to him, that the market is not as decentralized as it claims to be, and that characteristics like “robustness” and “stability” cannot be assigned to cryptocurrencies.

Also Read: Warren Buffett-Backed Nubank Launches Crypto Trading — Holds Bitcoin on Balance Sheet

Bank of Spain Governor Highlights Need for Fast Regulation in Defi and Crypto – The Governor of the Bank of Spain has already warned about the risks of bringing cryptocurrency to traditional financial institutions. Hernandez de Cos had raised concerns about this problem in February, noting that increasing private banks’ exposure to cryptocurrency could result in new equity and reputational risks.

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