The Bank of Spain has maintained the discourse on the risks of investing in Bitcoin since 2018. South African authorities announced that they are working on laws to regulate the use of crypto assets.
In recent days, the central banks of Spain and South Africa have insisted on warning about the risks of investing in Bitcoin (BTC). This has occurred despite the institutional support and growing adoption that the pioneering cryptocurrency has had.
On January 28th, the Bank of Spain (BDE) warned Spanish citizens about Bitcoin and other cryptocurrencies. The financial institution said that “no central bank or public authority supports them even though they bill themselves as alternatives to money.”
They claimed that there are “extreme volatility and liquidity problems” with digital assets. They further stated that price changes are not “always transparent”, so anyone could be “manipulate them”.
In the same way, they consider that cryptocurrencies have a speculative character since those who acquire them could have difficulties selling them. Furthermore, they say that they do not have the guarantees that “banking or investment products” can offer.
The Bank of Spain has already issued warnings of the same type on previous occasions. In 2018, they dedicated themselves to making the same remarks about cryptocurrencies in general.
For its part, the South African Financial Sector Conduct Authority (FSCA) reported receiving many complaints from investors. They claimed that “they have lost their savings by making cryptocurrency-related investments.”
Other users stated that they had been victims of “scams” with investments in digital assets that “promised a high level of returns.”
The FSCA and the Spanish bank emphasize that no central bank issues crypto assets, and the agency do not regulate the related investments. They assert that “people are unlikely to recover their money if something goes wrong.
At this moment, the FSCA is creating a regulatory framework for investments in digital assets. They say that they are seeking to “help better understand and regulate the use of cryptocurrencies in the coming months.”
Massive Institutional Support for Bitcoin
In December, companies from the United States, Canada, Australia, Switzerland, and Germany invested USD 20 billion in the main cryptocurrency on the market.
According to the Bitcoin Treasuries website, around 28 publicly traded companies, private companies, and mixed funds hold multi-million-dollar positions in BTC. Grayscale Bitcoin Trust leads this category with savings of 649,130 BTC, behind the Mt.Gox service with 141,686 BTC and Block.One (EOS) with 140,000 BTC.
Spain, Bitcoin, and CBDCs
The monetary authority of Spain continues to call for caution with Bitcoin due to its volatility and risks. However, they are also open to discuss cryptocurrencies, especially central bank digital currencies (CBDC).
Last July, the BDE joined a debate on CBDCs to review the reasons for their issuance. Likewise, they sought to conduct a preliminary analysis of the main implications of the issuance of this type of currency.
They did not stop recognizing the role of Bitcoin and other cryptocurrencies, in addition to fiat-pegged cryptocurrencies or stablecoins. Also, they note that those crypto assets have contributed to the acceleration of research into CBDCs.
It is necessary to remember that the investor must do his research before buying cryptocurrencies or other assets. That will allow him to make better decisions, thus making the best use of his investment.
By Alexander Salazar
