Bank of Spain: Crypto Makes Consumer Rights an Impossibility

The Bank of Spain issued a warning against trading Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term this Monday.

In a blog posted on the central bank's investor education page, the monetary authority noted that there are currently no laws in Spain governing cryptocurrency.

Thus, the central bank said, no Trading Platform Trading Platform In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real Read this Term or exchange offering its services to retail investors has the approval of Spanish authorities.

The blog post also highlighted the dangers that investors face due to the volatility of cryptocurrency prices.

Significantly, the monetary authority said that it believes that, due to the total lack of transparency surrounding the structure of cryptocurrency markets, "price formation...could be manipulated."

In a move that is also sure to precipitate a series of taunts from the 'crypto enthusiasts,' the central bank also said that cryptocurrency would not replace fiat currencies.

"You have probably wondered if virtual currencies can replace [fiat currency]," said the central bank. "No. These coins are not a common and generally accepted means of payment or exchange."

Not legal tender

Highlighting the fact that it does not consider any cryptocurrency to be legal tender, the blog post also states that anyone who loses their money buying digital assets is unlikely ever to see it again.

Interestingly, the central bank also said that, if a person were to buy something with bitcoin, they would lose all of their rights as a consumer.

"In the case of acquisition of goods and services through virtual currencies," said the central bank, "it would be impossible for any consumer to claim their rights if a problem arose with the payment or with the product purchased."

Though Spanish authorities may not like cryptocurrencies, they are fans of income tax. And though they are yet to properly regulate the cryptocurrency market, Spaniards have to pay capital gains tax on any income they made through investing in cryptocurrency.