Regulation should acknowledge the speculative nature of unsupported cryptocurrencies and treat them like gambling. This was the stance of Fabio Panetta, a member of the Central Bank Executive Council, who argued that digital currencies lack intrinsic value and resemble bets in disguise. He urged regulators to adopt strict measures. People have always taken chances, he noted, and in the digital era backed cryptocurrencies can function as a gambling tool. Panetta’s position aims to protect investors who place part of their savings into crypto assets, a figure some sources estimate at 845 million euros in Europe, while advocating higher taxes on the industry to reflect the costs it imposes on society.
The IMF puts the overall cryptocurrency market cap at about 2.5 trillion dollars. In Spain, the Spring Report 2022 from the Bank of Spain highlights 60,000 million euros in exposure to crypto activities. Around 5.7 million Spaniards own crypto assets, representing roughly 12 percent of the country’s population. The same report notes that digital currencies accounted for about 4.8 percent of GDP and 2.7 percent of all financial assets in Spain for the year 2021.
Spain’s economy stands among the top in Europe for crypto trading, drawing increased attention from scammers leveraging digital currencies. A central bank official warned that these assets can be used to evade taxes, launder money, finance terrorism, and bypass sanctions, while also bearing significant environmental costs. Indeed, crypto scams remain a pressing issue. The Chainalysis data platform estimates that scammers stole nearly 14 billion dollars worth of cryptocurrencies worldwide in 2021. In Spain alone, more than 400,000 individuals were affected by these scams.
Crypto scams in Spain
Major scams involving digital currencies have reached Spain. The Civil Guard and Mossos d’Esquadra uncovered a scheme in November in which an Albanian-based crime network allegedly victimized about 17,000 people and earned around 400 euros per minute. The scammers enticed victims with investments as low as 250 euros and amassed as much as 2.4 billion euros. During the summer, around 70 fraudulent multi product sales websites were hacked, impacting about 4,000 people and generating roughly 2.5 million euros. National Court investigations continue, totaling fraud amounts exceeding 1.5 billion euros.
Fraud comes in various forms. One recurring method is the ponzi scheme, where early investors are paid with funds from newer participants, creating a false sense of profit. This pattern has appeared in Spain, including a high profile arrest in Valencia in early 2022 on multiple counts of fraud and money laundering. In other cases, cryptocurrencies are used to launder proceeds from other illegal activities, such as a drug trafficking network in Seville that moved profits through digital currencies.
Scammers also rely on familiar tactics like phishing, posing as trustworthy sources to harvest personal data. By the end of 2021, law enforcement deployed a network that extracted as much as 600,000 euros from roughly 106 victims who later invested in cryptocurrencies. Fraud also spawns new schemes, such as the creation of a purported new virtual currency like Holdlife, which allegedly stole more than half a million euros from about a thousand people.
Regulation aimed at reducing volatility
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Beyond the fraud risk, digital currencies have shown notable volatility over the past year. The so called crypto winter followed the collapse of Luna and the Terra stablecoin in April, a downturn that swept across the market. Bitcoin and other major assets saw sharp price adjustments, with values swinging dramatically within days. By the end of 2022, prices for major coins had recovered somewhat but remained volatile.
The market experienced another shock when a major exchange faced bankruptcy and its founder faced legal action. The fallout rattled investors worldwide and prompted scrutiny from major financial firms and venture backers. Several prominent companies faced financial strain or restructuring as a result, highlighting the interconnected risks in the sector. The episode underscored the need for stronger safeguards and clearer regulatory guidance to protect consumers and maintain market integrity.