UBS advises investors to stay away from cryptocurrencies

The largest bank in Switzerland, UBS, has advised investors to stay away from cryptocurrencies and “build their portfolios around less risky assets”. UBS analysts have warned: “The regulators have proven that they can and will act against cryptocurrencies.”

UBS advises investors to stay away from cryptocurrencies

UBS’s global wealth management team warned in a notice released last week that global regulators, particularly the US and UK, would impose stricter regulations on electronic money. Citing that “the recent crackdown in China – which is spreading to miners, banks, electronic payment networks and social media – is harming crypto prices and miners,” UBS analysts wrote:

“The regulators have proven that they can and will act against cryptocurrencies … Therefore, we advise investors to be clear and to build their portfolio from less risky assets.”

They continued the long-standing warning in anticipation of changes in investor sentiment or regulatory measures that could result from fluctuations in the crypto market.

“We believe investors should avoid crypto speculation and consider risk-adjusted returns before buying alternative assets.”

The bank said a number of regulators around the world have started tightening controls on the cryptocurrency market.

Recently, China cracked down on Bitcoin mining and payments. Canadian regulators receive notices on cryptocurrency exchanges, and regulators in Japan, the United Kingdom, the Cayman Islands, and Thailand receive direct global crypto regulation.

The UK has put stringent requirements on crypto registration, which has led 64 companies to withdraw their applications. In South Korea, there is a risk that most of the small exchanges will close due to strict legal and banking requirements.

The UBS analysts went on to describe: “Cryptocurrency trading methods, such as leverage expansion 50 or 100 times, appear to contradict basic financial regulation.”

Even if we cannot rule out a future rise in the price of cryptocurrencies, we see this as a speculative market that poses a significant risk for professional investors.

Via USB

UBS Group AG is a Swiss multinational investment banking and financial services company headquartered in Switzerland. With headquarters in the cities of Zurich and Basel, the company is the largest banking institution in Switzerland and is present in all of the world’s major financial centers. UBS customer service is known for its strict confidentiality and banking security culture. With a key position in the Americas, EMEA and Asia-Pacific markets, UBS has grown into a major global financial institution.

As early as May, it was reported that the UBS Group was considering offering cryptocurrency services to its wealthy customers. UBS joins a growing list of major investment banks that are offering or looking to offer crypto investments to their clients, including Morgan Stanley, Goldman Sachs and Citigroup.

In terms of total assets in 2020, UBS Group is the largest bank in Switzerland with total assets of over USD 1.13 trillion, followed by Credit Suisse with USD 992 billion.

Several crypto investment options were being considered at the time, but any offer would represent only a fraction of a client’s total wealth due to volatility, one of the news agency officials told the news agency. Several options are being considered, including investing through third-party investment vehicles.

“We are closely monitoring developments in the digital asset space,” UBS said in a statement. What is important is that we are most interested in the technology underlying digital assets, especially distributed ledger technology. “

In January, UBS released a report advising whether its clients should buy Bitcoin. While the bank admits that the price of cryptocurrencies could rise, it remains skeptical of all significant real-world use cases. Paul Donovan, chief economist at UBS Global Wealth Management, recently said that “Bitcoin is being rejected for minorities who have restricted online accessibility”.

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