Wednesday, October 27, 2021

Spanish Central Bank Warns Bitcoin Investors

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The Bank of Spain has warned cryptocurrency investors, giving an example of the rise in bitcoin and ether prices. People were advised to be wary of volatility and uncertainties in the market.

Bitcoin price 48,000; ether price exceeded $ 1,800, breaking a record. While the popularity of crypto coins is increasing,
A warning message came from the Spanish Central Bank. The declaration published on February 9 emphasized three key points: The cryptocurrency market is volatile, complex and full of uncertainty.

Legal uncertainties in the EU continue
There are more than 7 thousand cryptocurrencies, especially bitcoin. Including developed countries,
most countries have not yet regulated them. Recalling this, the National Bank of Spain warned:

Crypto coins are not legally accepted as a means of payment,
It is not supported by a central bank or public agency,
It is not handled within the scope of consumer rights.
These are ‘high risk investments’
It was stated that cryptocurrencies are complex instruments, and these may pose a risk for small investors. Citing the derivatives market as an example, the Spanish Central Bank argued that this increased the risk rate. Other risk factors emphasized by the Central Bank are as follows:

The European Union has not yet regulated cryptocurrencies.
European investors do not have sufficient security against crypto assets like bitcoin.
In the securities markets, prices are determined in a measured manner. There are no suitable mechanisms for this in the crypto money market. Coin prices can therefore be manipulated.
The use of cryptocurrency by individual and institutional investors is still very limited. This,
it may cause them to be insufficient in terms of liquidity.
No business is obliged to accept cryptocurrencies like bitcoin as a means of payment. This law is not expected to change in the near future.
People use cryptocurrency companies located in different countries than their country of residence. This,
It can be a problem if a legal dispute arises.
Theft, fraud incidents.

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