Bank of Spain issues a warning about the effects cryptocurrency may have on the country’s financial stability. The bank is concerned that traditional institutions are adopting financial practices which aren’t properly regulated.
Cryptocurrency is no longer the talk of the future. Today, an increasing number of people own cryptocurrency assets. It’s becoming easier for consumers to spend their cryptocurrencies online. What we’re seeing now is a greater integration between traditional economic markets and cryptocurrency markets.
Cryptocurrency is potentially posing a systematic risk on conventional economies.
This is due to the increasing popularity of cryptocurrencies, which is allowing the use of cryptocurrency to become part of mainstream spending in some industries.
Where are people spending their cryptocurrencies?
1 – Online Casinos
Many mainstream gambling sites like Spinbit will now accept cryptocurrency. This opens the gambling market to people who may not previously have tried online casinos, which is contributing towards positive industry growth.
2 – E-commerce
Small business owners are benefitting from cryptocurrency because the online e-commerce giant, Shopify, accepts cryptocurrency as payment. Shopify is a store builder app. These e-commerce stores give people a wide variety of choice when it comes to spending cryptocurrencies.
3 – Investment
NFTs are changing the way people think about art and ownership. Today, cryptocurrencies can be used to purchase specific colors, which can be resold, or used to earn royalties from hex codes. This has brough to question the commercial value of something which exists only in concept.
In recent years, cryptocurrency has become popular. This means that more and more markets are opening up to cryptocurrency, but the market is still relatively limited, and consumers are still restricted by where they can spend cryptocurrency.
Financial regulations only apply to traditional economies, so for now, cryptocurrency remains unregulated.
This is risky because cryptocurrencies are highly volatile, which can have an unexpected impact on the wider economy. Changes in the value of crypto assets are sometimes corrected in financial assets.
There is also a risk caused by the market caps on stable coins such as USDT and USCT. This affects asset prices, which are influenced by market conditions.
Regulation in the cryptocurrency market is not yet fully established.
Spain has recently issued rules and recommendations for those advertising Bitcoin and other cryptocurrencies, but does not yet have the ability to regulate their usage once purchased.