Business & Finance

Central Bank of Spain Supports Cryptocurrency

While many countries are opposing the use of cryptocurrency, Spain is one of the countries that seem to support the use of it. The Central Bank of Spain Banco de Espana (BDE) recently recognized the merits that cryptocurrency can bring along. The positive outlook regarding cryptocurrency was pointed out in a document that was published by the central bank. The main theme of the document was to highlight the fact that digital currency can give a boost to the entire financial system of Spain.

A reliable and renowned author, Galo Nuno, who is also the Director General for the Economy at BDE, wrote the paper. His main aim was to focus upon the following objective:

Potential consequences and implications of digital currency for managing banking reserves, monetary policy and general financial stability.

He highlights the benefits that cryptocurrency is bringing along for the financial system of Spain. According to him, the world of crypto is an asset for the financial system of Spain because it helps them manage the overall money supply of Spain. Furthermore, even though the bank is not able to track the coins or currency notes under the blockchain technology, yet the digital coins could help Spain keep a track of its money and coins in an effective manner.

The document has a total of nine pages and it entirely supports the new technology. It emphasizes upon the positive impacts of cryptocurrency and if the central bank wishes to increase the overall money supply, then they can adjust the interest rates accordingly.

The governor of BDE, Luis Maria, states that cryptocurrency might have more risks than benefits. She states:

[Cryptocurrencies] have low acceptance as a means of payment, suffer extreme volatility, present multiple operational vulnerabilities and have been related to fraudulent or illicit activities in many cases.

Earlier this year, Spain drafted a legislation that was in favor of regulating the blockchain technology. The draft was fully supported by the Spanish Congress. The document entails regulations that would be reviewing the overall scenario of cryptocurrencies like Bitcoin. It will be coming up with ideas pertaining to the introduction of cryptocurrency technology into the Spanish market. The technology would go through an environment of controlled testing, which is most commonly referred to as “regulatory sandboxes”.

If the legislation is passed, then it would be most commonly viewed as a “digital good”. Considering it as a digital good would mean that it could then comply with the regulations for trade in Spain.

The director of National Securities Commission of Spain (CNMV) pointed out that the main motive behind regulating this technology is to give guarantee and assurance to the investors who are already investing and cryptocurrency. Furthermore, it will also promote the use of cryptocurrency within the country itself. He states:

We want to encourage innovation in financial services that give value added to clients, and make Spain an attractive country to work in, but we can remain impassive to a growing fund raising from the public, that our obligation is that it be done with all due guarantees.

Spain has also managed to launch its own cryptocurrency i.e. PesetaCoin. In an interview, the owner of PesetaCoin pointed out that the main goal of Spanish cryptocurrency is to rise above Bitcoin and to be used globally. They wish to get the same amount of global acceptance that Bitcoin has in the market of digital currency.

The specifications of PesetaCoin is far better than Bitcoin as stated by the owner itself. He states:

PesetaCoin is a Scrypt algorithm coin that generates blocks every minute. The value of the block is 166,386 PTC and difficulty is adjusted automatically each block using the famous “Kimoto Gravity Well”. There will be a total of 166 million PTC in circulation and the block reward halves every year. Some of the most notable advantages over Bitcoin: Difficulty setting is more advanced which prevents instant mining by large MultiPools, transaction confirmation time is much faster: 1 minute (Bitcoin is 10 minutes) and, at least by now, it is resistant to ASIC so it cannot be mined with massively specialized chips, making it accessible to the general public.

Whether other countries follow the footsteps of Spain or they continue to stand in the opposition, is an interesting dimension that the world of cryptocurrency might have to offer in future.

Hiram Nadeem

Hiram is a teacher and media sciences graduate with focus over finance news. Contributes to BlockPublisher with fintech news and sometimes, her opinions. Email: editor.news@blockpublisher.com

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