UBS chief rejects crypto: were very cautious

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Cryptocurrencies have yet to display sufficient fundamental value to be considered a valid investment opportunity, the UBS chief executive said.

We are seeing increased demand for virtual assets, but more specifically for crypto, we are cautious, Ralph Hamers told analysts on July 20 in previously unreported comments. Were very careful there.

The reason is that we are still struggling to see the core value of some of these investment opportunities. We believe they are more speculative than an investment opportunity.

UBS has largely stayed out of the frayas, with major lenders starting to offer clients access to cryptocurrencies through associated investment products, like Morgan Stanley, JPMorgan and Goldman Sachsall piling up in space.

READBitcoin, banking and blockchain: here’s what Goldman Sachs, JPMorgan and others are planning

The Swiss bank, however, has made several plays in the technology underlying cryptocurrencies known as blockchain.

UBS is one of the main backers of Fnality, a consortium of banks using blockchain to settle cross-border transactions, which is also part of the UK central bank’s digital currency project. The Swiss bank also led a group of banks to launch a blockchain-based transaction settlement platform called we.trade in 2019.

Hamers, who became chief executive of the Swiss bank at the end of 2020, said he didn’t care whether clients wanted to go into the space on their own.

If customers somehow want to allocate a percentage of their portfolio to it, that’s their decision. But we’re very careful about it, Hamers added.

About 15% of family offices around the world are exposed to cryptocurrencies, Goldman Sachs said in a July 21 study. Nearly eight in ten institutional investors say digital assets should be included in portfolios, Fidelity found earlier this week.

READFidelity Says 80% of Investors Want Crypto in Wallets: Regulation Is Coming

While the appetite for cryptocurrencies is growing, UBS is not the only bank to be cautious about the industry.

HSBC chief executive Noel Quinn said in May that the lender would not promote bitcoin to its clients because of its high volatility, without plans to launch a trading desk or offer exposure. HSBC has also favored blockchain investments, having developed an open source custody platform with fintech company R3 since early 2020.

Bitcoin’s journey has been particularly volatile in recent months, reaching an all-time high of $ 64,829 in mid-April before seeing several major flash price drops. The cryptocurrency briefly fell below a key price point of $ 30,000 earlier this week, before recovering somewhat to settle around $ 32,600 at 7:30 a.m. BST on July 23.

Without dabbling in crypto, UBS’s investment bank collected fees of nearly 70% compared to last year in the second quarter due to an increase in M&A work. Hamers said during the July 20 earnings call that merger and acquisition costs were the highest ever recorded by banks.

To contact the author of this story with comments or news, email Emily Nicolle

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