The central bank of Spain has issued a stern reminder to citizens, cautioning them of the latent risks involved in transacting unregulated cryptocurrencies.
The Bank of Spain’s notice, which was issued on February 10, came after an official blog post published a few days earlier, which had cited the institution’s position on cryptocurrencies, their traits, and their official status in Spain and the wider European Union.
Both documents discussed the fact that Spain has not yet issued any legislation when it comes to cryptocurrency, and that crypto exchange platforms and other firms in the sector are thus neither supervised not authorized by the central bank. Crypto platforms also do not have the protections of national deposit guarantee systems such as Spain’s Deposit Guarantee Fund, the bank states.
The institution blatantly cautions that in cases where crypto is used for purchases of goods and services, it would be an “impossible mission” for a consumer to claim their rights should anything go wrong with the payment or purchased product.
Indicating that no state has yet discussed the status of legal tender on the new asset class, the central bank recalls that its governor, Pablo Hernández de Cos, has determined that crypto “cannot replace money and is not a means of payment or common exchange.”
The governor has gone so far as to reject the term “cryptocurrency” itself as being too ambiguous, recommending that it should be replaced by the term virtual currency or crypto asset.
The Spanish central bank goes on to take note of the evolving — but still not unanimous — definition of crypto in the EU. The bank claims a 2015 Directive that deems crypto to be a digital representation of value without central bank or public authority issuance, and which does not have the status of legal tender. The Directive also cites that crypto can nonetheless be exchanged and transacted between natural persons or legal entities.
While admitting the recent development of the crypto sector, both documents highlight the high volatility, cybersecurity risks and weak consumer rights linked with the industry.
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