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The Bank of Spain and the CNMV warn about cryptocurrencies:

Clear, direct and without hesitation. So is the warning that the Bank of Spain and the National Securities Market Commission (CNMV) have launched this Tuesday on bitcoin and the rest of cryptocurrencies that are leading a renewed investment fever in recent days. “These are complex instruments, which may not be suitable for small savers, and whose price carries a high speculative component that it can even suppose the total loss of the investment “, they point out in a note published jointly.

Both organizations closely follow the high interest in bitcoin, dogecoin, ethereum and the rest of thousands of cryptocurrencies, and follow it with some concern, as extracted from the document. “They have experienced high volatility in their prices, which has been accompanied by a significant increase in advertising, sometimes aggressive, to attract investors,” they point out. Hence, they have decided to update the warning that they already launched in 2018 and in which they also warned of their “extreme volatility, complexity and lack of transparency”.

On this occasion, the Bank of Spain and the CNMV warn that there is no regulatory framework that supports them and gives guarantees to investors, so “they are not considered a means of payment; they are not endorsed by a central bank or other public authorities, and are not covered by protection mechanisms to the client as the Deposit Guarantee Fund or the Investor Guarantee Fund “.

As a consequence of all this, consider that we are facing a “high risk investment”, “complex” and that may “not be suitable for small savers” since its price “carries a high speculative component that can even mean the total loss of the investment”. In addition, they also warn about derivatives linked to these cryptocurrencies, “which further increase their complexity and the possibility of suffering losses greater than the initial investment, so they require great knowledge and experience” .

About their prices, alert that can be manipulated in the absence of “effective mechanisms” that prevent it and “without public information to support them”, and about their liquidity, ensures that many of the cryptocurrencies may not have sufficient liquidity “to be able to undo an investment without suffering significant losses, especially because their circulation among investors, both retailers and professionals, it is very limited. ”

Regarding its use as a means of payment, it recognizes that its scope is “very limited” and remembers “there is no obligation” to accept bitcoin or any other cryptoactive as a means of payment of debts or other obligations. “The future MiCA Regulation does not foresee that this will change. In addition, given their high volatility, cryptocurrencies do not adequately fulfill the functions of unit of account and store of value,” they point out.

As in 2018, the Bank of Spain and the CNMV place the focus on the lack of transparency and the risk of cross-border movements. “On many occasions, the different actors involved in the issuance, custody and commercialization of crypto assets are not located in Spain or, in some cases, even their location is not possible, so the resolution of any conflict could be costly and remain outside the sphere of competence of the Spanish authorities “.

In addition, it warns of the risks that investors suffer theft, scams, or losses: “The distributed ledger technology used for the issuance of cryptocurrencies carries specific risks. Its custody is not regulated or supervised. The loss or theft of private keys can lead to the loss of cryptocurrencies, without the possibility of This risk must be assessed before acquiring these assets, whether the wallet is managed personally, or if its custody is left to third parties “, the document concludes.

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