UBS warns regulators could pop ‘bubble-like crypto markets’


Swiss multinational investment banking giant, UBS, has warned its clients that crypto assets are not suitable for professional investors if regulatory pressure persists.

In a note sent to clients last week, the global management team at UBS said China’s latest crackdown has hurt crypto prices and operators, warning that further regulatory push globally could exacerbate downward pressure on digital stocks:

“Regulators have proven they can and will pick up crypto, so we suggest investors stay clear and build their portfolio around less risky assets. We have long warned that changing investment sentiment or regulatory repression could burst bubble markets.”

While UBS acknowledged that further crypto gains could be possible, they emphasized the risks the speculative asset class could pose to investors:

“While we cannot rule out future price gains in cryptocurrencies, we see this as a speculative market that poses significant risks to professional investors.”

The Swiss bank also warned of exploited trading, saying “Crypto-trading practices, such as extending 50X or 100X leverage, appear to be fundamentally contrary to mainstream financial regulation.”

The renewed Chinese crackdown on Bitcoin mining operations, begun in late April, has seen mixed analysis by the crypto community, with some arguing that China’s hashish power migration offers Bitcoin mining a chance to improve its environmental footprint and further decentralize. the network.

The banks see it differently, however UBS fears that China’s actions will create a cascading effect around the world of financial regulators.

UBS’s prediction already seems to be coming to fruition when the UK’s Financial Conduct Authority took action against Binanda’s largest exchange-traded deal, on 27 June.

Related: Binance was disappointed by Barclays’ “unilateral action” to block customer payments

A number of major high street banks in the UK including TSB, NatWest and Barclays have limited their customers ’access to crypto exchanges since the FCA took action against Binance in late June.

In May, Cointelegraph reported that UBS was reportedly working on launching crypto-trading services for wealthy customers.