UBS Chairman Axel Weber has warned against investing in Bitcoin, saying it is “not an investment we would advise”.
Speaking at the Davos world economic forum, Weber said Bitcoins and other cryptocurrency are too risky. In the 24 hours before his talk, Bitcoin’s value fell by 12 percent in over 24 hours.
“Retail clients, who don’t fully understand these products, should be protected from going into these products, because 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,” said Weber to CNBC.
Weber warned that “clearly with bitcoin, 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.”
The value of Bitcoin has plummetted since South Korea announced plans to ban the use of anonymous bank accounts in cryptocurrency trading from 30 January. The move is part of the state’s action to curb cryptocurrency trading, which is currently very popular in the country.
“There are great concerns regarding virtual currencies and [the] justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” said Park Sang-ki, South Korea’s justice minister.
“Some officials are pushing for stronger and stronger regulations because they only see more (investors) jumping in, not out.”
The Yo-yo value of the cryptocurrency has warned that the Bitcoin bubble is bursting.
“When it will fully burst is anyone’s guess and prices could yet rise again, before they fall further ahead,” said Capital Economics in a research note. “Triggers for the bubble to burst could be a further crackdown by regulators or a major hacking attempt.”
Bitcoin was trading at around $10,400 on Tuesday morning on the Bitstamp exchange.