Cryptocurrency Risks Outweigh Benefits: Bank of Spain Governor
Cryptocurrencies pose more harm than good, according to Bank of Spain governor, Luis Maria Linde. Amidst the warning on May 25, the governor remains confident that the underlying technology powering virtual currencies, the blockchain, has the potential to improve efficiency and reduce costs in the financial sector.
Luis Maria Linde. Source: Cantabria Industrial
The high profile regulator made the remarks at the 25th meeting of the Financial Sector organized by Deloitte ABC and Valuation Society. The governor went on to tout some of the shortcomings that have hindered and are expected to prevent widespread adoption of cryptocurrencies.
“In my opinion, their current use (of cryptocurrencies) presents more risks than benefits: they have low acceptance as a means of payment, suffer extreme volatility, present multiple operational vulnerabilities and have been related to fraudulent or illicit activities,” said Linde.
It is not the first time that an official of a high ranking government agency has taken a swipe of cryptocurrencies. Similar sentiments have been echoed all over the world, with some countries going as far as banning the use of cryptocurrencies.
Regulators Cryptocurrencies Stance
The Reserve Bank of India has given banks in the country an ultimatum of three months to cut ties and stop services to cryptocurrency businesses including exchanges and crypto wallet providers. Linde seems to share similar sentiments as his counterparts in India who have raised concerns about consumer protection, market integrity, and money laundering with the use of cryptocurrencies.
Even as regulators around the world maintain a prohibitive stance against virtual cryptocurrencies, they all seem to agree that blockchain technology benefits are worth pursuing. Linde on his part believes there is an opportunity worth pursuing in the technology of distributed records that support cryptocurrencies.
Bank of Spain Governor believes regulators around the world should focus on getting the most of the benefits of blockchain technology in the financial industry while also trying to keep risks at reasonable levels.
However, he has also warned that people should not confuse innovations that can improve efficiency in the banking sector such as artificial intelligence or big data with others that present high risk, which is the case with cryptocurrencies.
The governor has since called authorities all over the world to carry out internal transformational processes and devote sufficient resources for monitoring and analyzing emerging development in the financial sector.
Blockchain Technology Acceptance
Spain is not the only country playing close watch to blockchain technology. Switzerland is another country that is looking to harness the benefits of the emerging technology. The country has already formed a task force dubbed ‘Taskforce Blockchain’ led by Finance, Economic and Education ministers, tasked with the responsibility of examining the current state of the blockchain ecosystem.
The country already plays host to many blockchain related startups as it seeks to affirm its status in the FinTech space.
China is another country that has shown its receptiveness to blockchain technology even as it continues to wage war on cryptocurrencies and Initial Coin offerings. The state has already announced plans to integrate the technology into various aspects of governance.
Startups established companies, and even the government have shown signs of maximizing the immense potential of blockchain technology. The developments underscore the fact that China is s not planning to play second fiddle to any nation, in the race to becoming number one in the blockchain industry.