UBS advises staying away from cryptocurrencies – warns that regulators will take action against crypto – regulation Bitcoin News
The largest bank in Switzerland, UBS, has advised investors to “stay clear” of cryptocurrencies and “build their portfolio around less risky assets”. UBS analysts warned: “Regulators have shown that they can and will crack down on crypto.”
Notes and warnings about cryptocurrencies from UBS
UBS’s global wealth management team warned in a notice released last week that regulators around the world, particularly in the US and UK, will be introducing stricter cryptocurrency regulations. Citing that “China’s recent crackdown – which extends to miners, banks, e-payment networks and social media – has harmed crypto prices and operators,” the UBS analysts wrote:
Regulators have proven they can and will crack down on crypto … So we recommend that investors stay clear and build their portfolios around less risky assets.
“We have long warned that changing investor sentiment or regulatory crackdowns could burst bubble-like crypto markets,” added the analysts. “We think investors should avoid crypto speculation and consider risk-adjusted returns before buying alternative investments.”
The bank noted that a number of regulators around the world have started tightening their oversight of the crypto market. Lately, China has cracked down on bitcoin mining and payments. Canada’s regulators have sent notices to crypto exchanges, and regulators in Japan, the UK, the Cayman Islands and Thailand have targeted the global crypto exchange Binance.
The UK has imposed strict registration requirements on crypto exchanges, which resulted in 64 companies withdrawing their registration requests. In South Korea, there is a risk that most small exchanges will have to shut down due to strict regulatory and banking requirements.
The UBS analysts went on to describe: “Crypto trading practices, such as expanding 50x or 100x leverage, appear to be fundamentally at odds with mainstream financial regulation.” They warned:
Even if we cannot rule out future price gains in cryptocurrencies, we see this as a speculative market that harbors significant risks for professional investors.
However, the bank reportedly recognizes that some customers may want exposure to cryptocurrency, particularly bitcoin, and is rumored to be considering offering crypto services to wealthy customers. A growing number of investment banks are already doing this, including Goldman Sachs, Morgan Stanley, Citigroup, Standard Chartered, and DBS.
What do you think of UBS’s advice and warnings on cryptocurrencies? Let us know in the comment section below.
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