UBS warns regulators that could disrupt the “bubble-like crypto market”

Multinational Swiss investment banking giant UBS has warned clients that if regulatory pressures persist, crypto assets may not be suitable for professional investors.

In a statement to clients last week, UBS’s global wealth management team said China’s recent crackdown has impacted crypto prices and miners, warning that continued regulatory pressures around the world could add downward pressure on digital asset prices :

“Regulators have proven that they can and will crack down on cryptocurrencies, so we advise investors to be clear about building their portfolios around low-risk assets. We have long warned that a change in investor sentiment or regulatory crackdowns could burst the crypto markets like bubbles. “

While UBS acknowledges that cryptocurrencies can bring additional returns, they highlight the risks that speculative asset classes can pose to investors:

“Although we cannot rule out future price increases for cryptocurrencies, we see this as a speculative market that poses a significant risk for professional investors.”

The Swiss bank also warned of the leveraged trade, stating, “Cryptocurrency trading methods such as the 50- or 100-fold leverage expansion seem fundamentally to contradict mainstream financial regulation.”

China’s new crackdown on bitcoin mining operations, which began in late April, has revealed mixed analysis of the crypto community, with some suggesting that the hash move power from China is giving the bitcoin mining industry an opportunity to do theirs improve the ecological footprint and further decentralize the network.

Banks see it differently, however, as UBS is concerned that China’s actions will create hysterical financial regulators around the world.

UBS’s prognosis seemed to come true when the UK’s Financial Conduct Authority cracked down on the world’s largest digital asset exchange, Binance, on June 27.

Connected: Binance disappoints with Barclay’s “unilateral move” to block customer payments

Some of the UK’s leading street banks, including TSB, NatWest and Barclays, have restricted customer access to crypto exchanges since the FCA cracked down on Binance in late June.

In May, Cointelegraph reported that UBS was rumored to be working to roll out crypto trading services for high net worth clients.