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UBS CIO Brands Bitcoin Too Risky

November 21, 2017

UBS Group’s chief investment officer is the latest among a growing number of financial industry executives calling into question the viability of Bitcoin as an asset allocation, Bloomberg writes.

Mark Haefele tells the news service Bitcoin has yet to achieve critical mass as a possible currency vehicle, since all the cryptocurrencies combined haven’t reached the size of the smaller currencies. Earlier this month, UBS chairman Axel Weber said Bitcoin isn’t a store of value and is merely a speculative investment, according to Bloomberg.

Bitcoin has “an unquantifiable risk” not shared by other currencies, according to Haefele: a single terrorist incident in the U.S. with links to Bitcoin funding would bring serious scrutiny from U.S. regulators, he tells Bloomberg. But he adds that UBS’s research into Bitcoin has allowed it to talk with clients about the place of currencies and speculative assets in their portfolios, according to the news service.

“The thing that always strikes me about these, quote unquote, investments is not really when you would get into it but when you would get out of it,” Haefele tells Bloomberg. “So how do you know when to get out of a bitcoin investment?"

As Bitcoin continues rallying and making millionaires of many early investors, financial advisors are increasingly having to talk to their clients about the role of cryptocurrencies in their portfolios. Most warn clients of investing in digital currencies, although some don’t stand in their way, as reported previously.

(Getty)

On Monday Bitcoin passed the $8,000 mark and is now up 700% for the year, according to Bloomberg. And CME Group, the largest exchange owner in the world, plans to roll out Bitcoin futures by the end of 2017, the news service writes.

Nonetheless, Haefele and Weber’s caution is shared by executives at other large financial firms. JPMorgan Chase CEO Jamie Dimon has labeled Bitcoin “a fraud” while Credit Suisse Group CEO Tidjane Thiam has called it the “very definition of a bubble.”

By Alex Padalka
  • To read the Bloomberg article cited in this story, click here.