World's biggest wealth manager says no to bitcoin

UBS Group, the world’s largest wealth manager, isn’t prepared to make portfolio allocations to bitcoin because of a lack of government oversight, the bank’s chief investment officer said.

Bitcoin has also not reached the critical mass to be considered a viable currency to invest in, UBS’s Mark Haefele said in an interview. The total sum of all cryptocurrencies is “not even the size of some of the smaller currencies” that UBS would allocate to, he said.

Bitcoin has split investors over the viability of the volatile cryptocurrency and UBS is among its critics. Bitcoin capped a resurgent week by climbing within a few dollars of a record $8,000 on Friday. Still, events such as a bitcoin-funded terrorist attack are potential risks which are hard to evaluate, he said.

“All it would take would be one terrorist incident in the US funded by bitcoin for the US regulator to much more seriously step in and take action, he said. “That’s a risk, an unquantifiable risk, bitcoin has that another currency doesn’t.”

While sceptics have called bitcoin’s rapid advance a bubble, it has become too big an asset for many financial firms to ignore. Bitcoin has gained 17 percent this week, touching a high of $7,997.17 during Asia hours before moving lower in late trading. The rally through Friday came after bitcoin wiped out as much as $38 billion in market capitalisation following the cancellation of a technology upgrade known as SegWit2x on November 8.

UBS Chairman Axel Weber this month said Bitcoin was a speculative investment and not a store of value, while Credit Suisse Group CEO Tidjane Thiam described the speculation around bitcoin as the “very definition of a bubble.”