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UBS Chairman Warns Retail Investors Off Cryptocurrency




Union Bank of Switzerland has a client network extending across 50 countries and is a global banking infrastructure provider; but its chairman, Axel Weber, doesn’t think retail investors have the “knowledge” to “sensibly” invest. Institutional investors, however? He’ll work with them.

The World Economic Forum in Davos began today, January 23, 2018. Speaking at the forum was Union Bank of Switzerland (UBS) Chairman Axel Weber who, like others in his industry, voiced his concern over investments in cryptocurrencies.

While Switzerland has seen a relative renaissance of blockchain and cryptocurrency-related development, one of its largest banks isn't quite on board. Weber told those attending his talk that cryptocurrencies are "not an investment we would advise." To date, he has maintained fairly consistent criticism of cryptocurrencies, specifically directed at bitcoin, of which he said, "this is a speculative investment; I don't call it currency and retail clients do not have the risk-bearing capacity nor the knowledge to invest in that."

Weber doesn't stand alone; while investors flock to what they see as opportunities, some say that the whole marketplace is just a bubble. Naysayers include big names in value investment, like JP Morgan CEO Jamie Dimon and business magnate Warren Buffett. They also haven't been shy about expressing their doubts, although it is noteworthy that the former admitted to regretting what some might call his inflammatory comments

For his own part, Weber said he is motivated by consumer protection and avoiding backlash if there's a burst:

"If there is a retail client affected in the future, the question will be again who was the bank that sold them these products and then banks will be blamed again for what has happened."

Weber makes a distinction between institutional and retail investors; he regards institutional clients as "grown-ups" who "know what they are doing." So, it would appear Weber has less faith in retail investors to adequately understand the risks inherent to cryptocurrency investments. By contrast, he noted that institutional investors would be regarded differently if they asked for help to enter cryptocurrency marketplaces: 

"On the institutional side, if institutional investors want to buy bitcoin, of course we can help them do that."

In this case, a big banker favors barriers to entry for small-time investors, but for larger institutions, not so much.

The tone is a bit paternalistic. "Retail clients?" Weber said. "I think they should rely on banks doing the sensible thing, and actually looking at them, and protecting them … And retail clients do not have … the knowledge, to invest in that."

If the bankers that decry cryptocurrencies also value the free market from which their institutions arose, it would seem that an effort to restrict investor participation through central authorities contradicts those values.

Jeremy Nation

Jeremy Nation is a writer living in Los Angeles with interests in technology, human rights, and cuisine.

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