13 May 2022 15:23, UTC.
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The governor of the Bank of Spain (BoE) and a member of the Basel Committee on Banking Supervision (BCBS) called for not waiting for the crypto industry to proliferate and pose a risk to the financial system.
Pablo Hernández de Cos delivered a keynote address explaining how digital asset regulation should be addressed. Speaking at the annual general meeting of the International Swaps and Derivatives Association (ISDA), the official said that the cryptocurrency and decentralized finance (DeFi) industry needs to be brought in line with the law immediately.
Hernandez de Kos issued a warning: if the world’s banks and regulators don’t give it the attention it deserves right now, the industry will proliferate and greatly affect the financial stability of the economic system.
“Despite its phenomenal growth and popularity, the crypto industry is still only 1 percent of the world’s total financial assets, and the direct exposure of banks is relatively small today. However, experience shows that such markets can grow rapidly and pose risks to individual banks and overall financial stability,” said the WE manager.
The head of the Spanish central bank suggested pursuing a “proactive and forward-looking” strategy and added that if done right, it would be possible to maintain a balance between openness to new technologies and reducing the risks associated with them. The government official criticized the current state of the digital currency market, mentioning Dogecoin (DOGE) as a “meme cryptocurrency” and its impact on traders and the role of Tesla CEO Elon Musk in this.
Hernandez de Kos said there are few assets with similar capitalizations capable of showing such swings from a simple tweet or from “skits on the late-night show.” The official was referring to the American show Saturday Night Live, where Musk performed last year. The price of DOGE rose sharply a few weeks before the show, but dropped 40% after the show.
VE previously reported that amid tightening policies to regulate digital assets, users in Europe are increasingly opting for decentralized finance.
#crypto #industry #regulation