A recently published Bank of Spain report revealed that Spaniards have invested almost 60 billion euros in cryptocurrencies in 2021. The Spring 2022 Financial Stability report translates that this corresponds to 1,275 euros per inhabitant (USD $1,375), approximately the 4.8% of Spanish GDP.
The results of the study offered by the Bank of Spain are based on Chainalysis statisticsbased on advanced identification and geolocation algorithms.
The report revealed that the European region carried out around 10% of cryptocurrency transactions made with euros, between July 2020 and June 2021, which presents a weight proportional to its GDP, “similar to its relative economic size in the European region”.
So, The entity indicates that the total investment in cryptocurrencies, including Bitcoin, is considered small. It expresses that the stock market moved a volume of transactions six times greater, however, as investment in digital currencies grew, the purchase and sale of shares fell by almost 12% in the country in 2021.
The report, which aims to assess the risks that this type of technology can bring and the adoption of regulatory policies that can mitigate risks and improve financial efficiency in the region, places Spain in fifth place by volume of crypto asset transactions in the European Union, with 1,275 euros per inhabitant, which represents about 60,000 million euros during 2021, falling below the United Kingdom, France, Germany and the Netherlands , and above Switzerland and Italy.
It also indicates that, in terms of operations with crypto assets without backing, these concentrate the majority of transactions, with a bulk of negotiation of approximately 75% of the total in the entire region, being the most volatile. Now, when it comes to the type of protocol or type of exchange platform, the report warns that they had a “greater relative weight of decentralized services” with 64% in Spain and 53% in other economies.
Spain against crypto assets
According to what was stated in the study, Spain has multiplied the value of the main cryptoactive markets, by 13.4 its market value from the beginning of 2020 to its maximum in November 2021, and up to 7.8 until February 2022.
Likewise, it points out that crypto assets without support of traditional financial assets, such as Bitcoin (BTC) and Ethereum (ETH), account for more than 60% of the value of cryptocurrency transactions carried out last year and more than 20% in stablecoins, while the rest were made by higher volatility cryptocurrencies.
He also highlighted that the rate of adoption of digital assets in the region, according to the annual Finder study, carried out in 27 countries, 12% of the adult population owns cryptocurrencies in the country.
“12% the percentage of adults who own crypto assets in Spain (…) 13% in the case of men and 10% for women, while the holding of crypto assets would be higher for the youngest, being the age group between 18 and 24 years the one with the highest percentage of adoption”, specifies the text.
In this context, he also indicated that according to a Statista survey, 10% of respondents in Spain claim to use or own crypto assets. “These adoption percentages are close to, and in some cases higher, than those observed in these surveys for other developed countries”he stressed.
Regarding the regulatory framework, Spain still does not have its own regulation on these digital assets, it is only responsible for operating the registry of service providers for exchanging digital currency for fiduciary currency and for the custody of electronic wallets.
“Cryptoactive activities in Spain are not currently regulated, except for certain advertising requirements set by the CNMV, so they are not subject to activity reserve,” the entity said.
However, the entity recognizes the potential of the technology underlying cryptocurrencies and highlights the fact that they can improve “the efficiency and resistance in the financial system” by reducing the costs of operations, and that these give way to greater interoperability in payments and greater competition between the different actors.
However, he points out that its development will only be beneficial if it is carried out within a regulatory framework that mitigates risks and maintains confidence in the financial system.
illicit activities
In this regard, the Bank of Spain highlighted that the percentage of these operations in the country only represents approximately 1% of the total transactions, between July 2020 and June 2021.
In the case of Spain, the agents involved in terms of the type of criminal activities that are carried out, are mainly for scams with 57% of the total, and theft of funds 31.8%. Although the entity notifies that these data may be due to the way in which these figures are calculated, since Chainalysis only mentions those complaints that have been made public and that, failing that, have reached the respective authorities.
The entity also mentions the prominence that institutional investors have gained during this last year in cryptocurrency negotiations in Europe, without there being a degree of involvement in this segment of financial entities.
“Over time, a greater relative importance of larger transactions (of more than 10 million US dollars) is observed, which suggests that institutional investors would have gained relative importance in operations with these currencies”, expresses the text.
Europe would overtake North America
According to the report, Europe becomes the main recipient region of digital currencies worldwide, thus surpassing North America in global trading.
With a transaction volume of around €845 billion, which translates into a total 25% of the world, Spain is ahead of North America, which adds 18% of transactions globally.
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