UBS: Cryptocurrencies are a gamble, not investments

UBS warns that cryptocurrencies are not suitable for investment.

UBS, the Swiss financial group, warned clients that cryptocurrencies are not suitable for investment, as a market bubble could burst under regulatory pressure.

«Regulators have shown that they can and will crack down hard on cryptocurrencies. Therefore we advise investors to stay away and build their portfolios on less risky assets», the note published last week states.

UBS said its concerns are primarily tied to China1s tightening stance on digital assets. Earlier authorities in China restricted cryptocurrency mining, and also banned banks and payment systems from participating in bitcoin transactions.

In June, the U.S. Federal Reserve called the Tether (USDT) stablecoin a ‘challenge’ to financial stability and a ‘new disruptor’ of the short-term lending market.

In the same month FCA barred Binance’s UK unit from conducting any regulated activity without prior written authorization. In Thailand accused the Bitcoin exchange of operating without a license.

Japan’s regulator also issued a warning to Binance, and Cayman Islands authorities initiated an investigation into the company’s activities.

Analysts at UBS warned that common practices in cryptocurrency trading—most notably leverage of 50x or 100x—run counter to the rules that govern traditional markets.

«The prospect of substantial profits may tempt investors, but we believe that crypto speculation is a gamble, not an investment. Those seeking access to digital payment assets may instead consider the fintech sector, which, in our view, should benefit from structural growth», the analysts added.

UBS is not alone in voicing caution. Bank of America analysts argued that «единственная ценность биткоина — рост его курса», stressing that digital gold is useless as a store of value or a means of payment.

In June, Goldman Sachs analysts described bitcoin as a «not a suitable investment», stating that cryptocurrencies lack long-term value.

Earlier, the head of the bank’s digital assets division, Matthew McDermott, acknowledged that digital gold may be considered as an investment instrument.

In May, UBS was reported to plan offering wealthy clients access to cryptocurrencies.

After Sell-Off, Is Now the Time to Buy Crypto_en_1536199 by ForkLog on Scribd

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