UBS Group AG Chairman Axel Weber said the Swiss bank won’t trade Bitcoin or offer it to retail clients as increased regulation could lead to a “massive” drop in value.
“This is something where the price is really unclear,” Weber said in an interview Wednesday with Bloomberg TV at the World Economic Forum in Davos, Switzerland. “We fear that in the future if these investments implode and the market corrects, then investors will be looking at ‘who sold us this?’”
There’s every sign that greater oversight is on the way — South Korea is debating a potential ban on bitcoin exchanges amid concerns over money laundering and tax evasion, while China has been at the forefront of attempting to control the technology.
The European Commission said this month it may ramp up regulation of virtual currencies because of signs of a pricing bubble. In Europe, Nordea Bank AB has banned its employees from trading Bitcoin and other cryptocurrencies.
There’s very little elasticity in the supply of Bitcoin, so every increase in demand directly results in an increase in price, the UBS chairman said. Weber called for regulators to “zoom in” on Bitcoin, which on Wednesday traded at $11,076, down from a high of $18,675 on Dec. 18.
‘Fake Currency’
Banking executives across Europe have expressed doubts about the cryptocurrency as an investment. Bitcoin is a “fake” currency and governments can’t accept a growing market of money not printed by a country, Russia’s VTB Bank PJSC management board Chairman Andrey Kostin also said in a Bloomberg Television Wednesday in Davos, adding that there’s “no big future” for Bitcoin. Credit Suisse Group AG Chief Executive Officer Tidjane Thiam said in November that Bitcoin is the “ very definition of a bubble.”
Outside of cryptocurrencies, Weber also cited real estate in Switzerland and other countries as a potential bubble, adding that vacancy rates are increasing which will probably lead to some defaults on loans. That could lead to a “broader correction” in the real estate market, Weber said.
