64% of risk managers consider that cryptocurrencies will have a significant impact on the global financial system. However, of them, 75% admit not knowing neither how much nor when that impact will be. This is revealed by the EALDE Risk Survey 2022, a survey carried out by EALDE Business School.
“Cryptocurrencies represent a paradigm shift from a traditional fiduciary system, controlled by central banks and governments, to decentralized finance, which aims to create a more transparent financial system outside the control of companies and governments”, indicates Enrique Farras, Director of EALDE Business School.
In this way, cryptocurrencies allow reduce costs and bureaucracy in asset transactions and facilitate access to capital through non-centralized channels. However, the high volatility that cryptocurrencies have also poses a challenge for risk managers. “Many savers are going to ask investment companies that part of their savings be invested in cryptocurrencies. However, these investments remain high risk, given the volatility of the value of the crypto assets”, adds the expert.
Cyber risks and money laundering risks
Another challenge that crypto technology presents is its vulnerability to cyber risks. And it is that, “Just like any software, a cryptocurrency is developed by a person who knows programming. Therefore, there may be flaws in its design, so that it is hacked and cryptocurrency thefts can occur “, says José Arturo Mora, coordinator of the Digital Risks and Cybersecurity area at EALDE Business School. For the expert, these security breaches are One of the main factors explaining the fall in value of some of the most important cryptocurrencies, such as bitcoin, in recent months.
Added to this is the risk of fraud and money laundering that may arise as a result of the use of cryptocurrencies in the global market. In fact, already in 2019, the Financial Action Task Force (FATF) issued a guide in which it highlighted that virtual assets create opportunities for “money launderers, terrorist financiers and other criminals to launder their profits or finance their illicit activities. ”.
In this sense, in Spain the Ministry of Finance is already preparing an anti-fraud law which, as of January 2023, will oblige cryptocurrency holders to declare the operations and balances they have of these assets.
Caution against ignorance
Given the lack of knowledge that exists in society about how cryptocurrencies work, experts advise being very careful when investing in this type of digital asset. “Initially, it is advisable to invest small amounts, which do not pose a problem if they are lost.”, indicates José Arturo Mora. In addition, when investigating the platform or exchange that is going to be used to invest, it is recommended to check that it is a reliable site, “that you have a verifiable tax address, and that there are people in the blockchain user community talking about and actively using them. This way we will make sure that we are not dealing with a fraudulent site”adds the expert.