Cryptocurrencies have yet to display enough fundamental value to be considered a valid investment opportunity, the chief executive of UBS has said.
“We do see an increased demand in virtual assets, but more particularly crypto, we are cautious,” Ralph Hamers told analysts on 20 July in previously unreported comments. “We’re very cautious there.”
“The reason for that being is that we still find it difficult to see the fundamental value of some of these investment opportunities. We feel that they are more speculative than an investment opportunity.”
UBS has largely stayed out of the fray as major lenders begin offering clients access to cryptocurrencies through associated investment products, with the likes of Morgan Stanley, JPMorgan and Goldman Sachs all piling into the space.
The Swiss bank has, however, made several plays in the technology underlying cryptocurrencies known as blockchain.
UBS is one of several leading backers of Fnality, a consortium of banks using blockchain to settle cross-border trades, which is also part of the UK’s central bank digital currency project. The Swiss bank also led a group of banks to launch a blockchain-based trade settlement platform called we.trade in 2019.
Hamers, who became chief executive of the Swiss bank in late 2020, said he was unconcerned if clients wished to dabble in the space on their own.
“If clients want to kind of allocate a percentage of their portfolio to it, it’s their decision. But we are very cautious about it,” Hamers added.
About 15% of family offices globally have exposure to cryptocurrencies, Goldman Sachs said in a 21 July study. Nearly eight in 10 institutional investors say that digital assets should be included in portfolios, according to findings from Fidelity earlier this week.
Though appetite for cryptocurrencies is increasing, UBS is not the only bank to be cautious on the sector.
HSBC chief executive Noel Quinn said in May that the lender would not promote bitcoin to its clients due to its high volatility, with no plans to launch a trading desk or offer exposure. HSBC has also favoured investments in blockchain, having developed an open-source custody platform with fintech firm R3 since early 2020.
Bitcoin’s journey has proved particularly volatile in recent months, hitting an all-time high of $64,829 in mid-April before tumbling through several major flash price crashes. The cryptocurrency briefly dipped below a key $30,000 price threshold earlier this week, before regaining its footing somewhat to settle around $32,600 as of 7:30am BST on 23 July.
Without dabbling in crypto, UBS’s investment bank brought in fees nearly 70% ahead of last year during the second quarter due to a surge in mergers and acquisitions work. Hamers said in the 20 July earnings call that the M&A fees were the bank’s “highest on record”.
To contact the author of this story with feedback or news, email Emily Nicolle