The world’s ultrawealthy may be passionate collectors of rare and priceless art, but they’re turning their noses up at the thought of owning digital versions.
Non-fungible tokens (NFTs) took the world by storm last year after the Singapore-based crypto entrepreneur known as MetaKovan paid a cool $69 million at a Christie’s auction to purchase a digital work by the artist Beeple.
While it swiftly sparked a gold rush among small investors hoping to get rich overnight by speculating on the right NFT collectible, the world’s leading money manager to the über-rich says that its discerning clients won’t be jumping on the bandwagon anytime soon.
“Real institutional demand for NFTs? No, we don’t see that,” UBS chief executive Ralph Hamers told reporters in an earnings call on Tuesday.
The Swiss banking giant oversees $4.6 trillion in assets on behalf of its global clients, many of whom are high and ultrahigh–net-worth individuals. The thought of investing their hard-earned money on a digital image or collectible in exchange for a certificate of ownership built into a distributed blockchain ledger isn’t so appealing, according to UBS.
“It seems to be for the moment still a retail thing. We are very careful in that business,” said Hamers.
A few well-known celebrities have come out in favor of NFTs as a new asset class, including Mark Cuban, the billionaire owner of NBA basketball team the Dallas Mavericks, and the rappers Eminem and Snoop Dogg.
But other wealthy patrons such as Keanu Reeves, who collects motorcycles and is dating an artist, have been less kind about the digital art. When asked in an interview about NFTs, the star of the Matrix and John Wick films laughed openly at the notion of paying to own an infinitely reproducible image.
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UBS boss Hamers said he still eschews cryptocurrencies, but did add that the bank was looking at some form of tokenizing assets.
Recently, the bank created a digital platform to buy and sell ownership of physical gold stored in its vaults, a popular inflation hedge preferred by enthusiasts over exchange-traded funds such as the SPDR Gold Trust, all from the comfort of a smartphone.
“We’re certainly looking at digital assets, and NFTs are a form of digital asset, but we are taking small steps in that area,” the CEO said, adding that he is seeing retail interest in the UBS Gold platform.
Earlier on Tuesday, the bank reported quarterly results that showed its highest annual net profit in 15 years, at $7.5 billion.
Management pledged to buy back up to $5 billion in shares this year and updated its strategic targets to include a new emphasis on digital wealth management following its planned acquisition of Wealthfront.
UBS agreed last week to purchase the Palo Alto-based robo-adviser and automated financial planning platform, for $1.4 billion in cash in a bid to cater to the growing investment needs of millennial and Gen Z clients.
Shares in UBS, a systemically important financial institution to Switzerland, jumped over 7% in trading on Tuesday to lead the Swiss benchmark blue-chip SMI index.
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