UBS chairman warns against bitcoin investment as cryptocurrency falls 12%
Axel Weber says cryptocurrency ‘not an investment we would advise’ while South Korea bans anonymous trading.
Bitcoin has fallen 12% over 24 hours while the chairman of UBS warned against investing in it and South Korea continued to crack down on cryptocurrencies by banning anonymous trading.
Talking at the Davos world economic forum, UBS Chairman Axel Weber, said that bitcoin and other cryptocurrencies were speculative, risky and “not an investment we would advise”.
“Retail clients, who don’t fully understand these products, should be protected from going into these products, because if there is a retail client affected in the future, the question will be again who was the bank that sold them these products and then banks will be blamed again for what has happened,” Weber told CNBC.
UBS’s comments echo those recently made by billionaire investor Warren Buffett, who said he would never invest in cryptocurrency despite bitcoin’s nearly 2,000% rise in 2017.
Consultancy Ernst & Young also warned Monday that so-called initial coin offerings (ICOs), which offer cryptocurrency tokens to raise funds, were at risk of cybercrime. Of the 372 ICOs analysed, raising a total of $3.7bn, roughly $400m had been stolen by hackers, who were taking up to $1.5m in ICO proceeds per month.
The warnings of theft from ICOs come as the chair of the US Securities and Exchange Commission, Jay Clayton, said the agency had seen “disturbing” evidence that investors in ICOs had been counselled that they did not need to comply with federal securities law.
“I have instructed the SEC staff to be on high alert for approaches to ICOs that may be contrary to the spirit of our securities laws and the professional obligations of the US securities bar,” Clayton said.
The statements of governments around the globe suggesting regulation is on the horizon have led to the vast cryptocurrency price fluctuations that have seen bitcoin halve in value since its high of just under $20,000 in December.
Bitcoin trading was down approximately 12% over the last 24 hours, trading at around $10,400 on Tuesday morning on the Bitstamp exchange, following news that South Korea – the world’s third-largest cryptocurrency market – would implement its planned ban on use of anonymous bank accounts in cryptocurrency trading from 30 January.
South Korean Financial Services Commission vice chair Kim Yong-beom said that the new measures will prevent those residing outside South Korea who do not have local bank accounts and minors younger than 19 from buying or selling bitcoins and other digital currencies. The move forms part of the country’s action to curb cryptocurrency trading, including the raiding of local exchanges over money laundering, with the government looking at a potential ban on trading.
A woman walks by a screen showing prices, including bitcoin, top left, in downtown Seoul, South Korea. Photograph: Lee Jin-man/AP