The governor of the Bank of Spain, Pablo Hernandez de Cos, in a speech indicated that there should be a swift move to regulate cryptocurrencies.
Pablo Hernandez de Cos, governor of the Bank of Spain and chairman of the Basel Committee on Banking Supervision, has long a situation where you buy a cryptocurrency with the expectation of selling it at a higher price for profit later. spoken about the need for cryptoassets to have oversight. He has also expressed about the risks of the banking system having crypto exposure . Y, de hecho, desde hace casi dos años este banco central se ha abocado to study the subject of cryptocurrencies.
Now, in a new public intervention, he has said that the cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. and decentralized finance (DeFi) space needs to be regulated regulation is when something is controlled by a specific set of rules. quickly to avoid risks of financial instability. Hernandez de Cos also mentioned how this rapid approach should bring the cryptofinancial system within regulatory reach before it grows.
Hernandez de Cos, who also sits on the Basel Committee on Banking Supervision, explained his views on how he believes cryptocurrency regulation should be approached, in a keynote speech given at the 36th annual general meeting of the International Swaps and Derivatives Association. There, Hernandez de Cos explained that it should. there should be a swift move to regulate cryptocurrencies and decentralized decentralization refers to the property of a system in which nodes or actors work in concert in a distributed fashion to achieve a common goal. financial markets before they can grow and affect the financial stability of the economic system. .
In fact, he said:
Despite this phenomenal growth, cryptoassets still represent only around 1% of total global financial assets, and banks’ direct exposures are relatively limited to date. However, we know that such markets have the potential to scale rapidly and present risks to individual banks and financial stability in general.
In addition, the governor recommended a “proactive and forward-looking regulatory and supervisory approach”. on the subject, stating that there can be a balance between welcoming these technologies and also mitigating their risks.
Hernandez de Cos also took the opportunity to criticize the current state of the cryptocurrency market, citing the fever that meme coins caused as Dogecoin and the effect that the CEO’s thoughts of Tesla y SpaceX, Elon Musk, may have in these markets. In this regard, he said:
How many USD$3 trillion asset classes exhibit wild swings in valuations based on seemingly bizarre events, such as tweets posted on April 20 or Saturday Night Live skits?
It refers specifically to the intervention that Musk had in June 2021 in that U.S. program, where in the usual joking tone of that television space, the CEO of Tesla called Dogecoin un “barullo” and its price collapsed immediately. It has also been the big cause of its price is inflated by banal comments on the social network.
For him, these are clear signs that the market an area or arena, online or offline, in which commercial dealings are conducted. is not as decentralized as it pretends to be, and that traits such as “robustness” or “stability” cannot be attributed to cryptocurrencies.
More from his speech
Hernandez recalled the joke from a few years ago that described cryptoassets as “everything you don’t understand about money combined with everything you don’t understand about computers.” In this regard, he said that “it is fair to say that, since then, our understanding of both the economic and technological dimensions of cryptoassets has deepened.”
“A pesar de nuestra mejor comprensión de los criptoactivos y DeFi, el jurado aún está deliberando cuando se trata de determinar la mejor manera de aprovechar sus promesas y beneficios citados con frecuencia, mientras se mitigan sus riesgos y se salvaguarda la estabilidad financiera. Las deficiencias de la arquitectura financiera existente son bien conocidas, incluidos a veces los altos costos, la baja velocidad, el acceso limitado y la transparencia insuficiente. Los supuestos objetivos de DeFi a movement encouraging alternatives to traditional, centralized forms of financial services. y los criptoactivos de un sistema financiero continuo, abierto, inclusivo y transparente son ciertamente nobles. Algunos también podrían simpatizar con la idea de una red robusta caracterizada por su “simplicidad no estructurada”, tal como la concibió originalmente Satoshi the smallest unit of bitcoin with a value of 0.00000001 BTC. Nakamoto”.
Doubts about decentralization the handover of control from a central authority to several different custodians.
He also provided an analysis of decentralization:
“Can a truly decentralised financial system ever be achieved in practice? A growing literature has highlighted the “paradox” and “illusion” of DeFi’s current set-up, where, despite its name, some level of centralisation is inevitable and where structural aspects could lead to a concentration of power. Such criticisms are not limited to stakeholders with vested interests: key advocates of DeFi have also acknowledged the “trilemma” of having a secure, scalable and decentralised financial system”.
He also expressed:
“In short, we don’t yet know whether today’s DeFi and crypto ecosystem will deliver net benefits to society or not. The oft-quoted mantra of the utility of the underlying distributed accounting technology now needs to be backed up by convincing real use cases that will benefit society as a whole. So while it’s important to keep an open mind, in the meantime more work is needed to answer some of the questions I’ve outlined.”
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