UBS says it won’t trade in bitcoin as European banks call it a ‘fake’ currency
Zurich/London — UBS Group chairman Axel Weber said the Swiss bank won’t trade bitcoin or offer it to retail clients as increased regulation could lead to a "massive" drop in value.
"This is something where the price is really unclear," Weber said in an interview with Bloomberg TV at the World Economic Forum in Davos, Switzerland on Wednesday. "We fear that in the future if these investments implode and the market corrects, then investors will be looking at ‘who sold us this?’"
There’s every sign that greater oversight is on the way — South Korea is debating a potential ban on bitcoin exchanges amid concerns over money-laundering and tax evasion, while China has been at the forefront of attempting to control the technology. While banks are increasingly looking at blockchain, the technology which underpins bitcoin, they’re reluctant to invest client money into crypto-currencies due to compliance concerns.
The European Commission said this month that it may ramp up regulation of virtual currencies because of signs of a pricing bubble. While Credit Suisse Group CEO Tidjane Thiam warned in November that bitcoin is the "very definition of a bubble", at Davos on Wednesday he said "digital currencies have a future", and that he is a "fan of blockchain".
Banking executives across Europe have expressed doubts about the crypto-currency as an investment. Bitcoin is a "fake" currency and governments can’t accept a growing market of money not printed by a country, Russia’s VTB Bank PJSC management board chairman Andrey Kostin also said in a Bloomberg TV interview in Davos, adding that there’s "no big future" for bitcoin. In Sweden, Nordea Bank has banned its employees from trading bitcoin and other crypto-currencies.
There’s very little elasticity in the supply of bitcoin, so every increase in demand directly results in an increase in price, the UBS chairman said. Weber called for regulators to "zoom in" on bitcoin, which, on Wednesda,y traded at $11,076, down from a high of $18,675 on December 18.