The chairman of Swiss banking giant UBS said in an interview published Sunday that he does not consider the soaring cryptocurrency bitcoin as money and called for regulators to intervene. Bitcoin prices have surged this year from less than $1,000 in January to $17,000 last week, after trading in the digital currency began on the Chicago Board Options Exchange - the first time it has appeared on a traditional platform.
But in an interview with the NZZ am Sonntag weekly, UBS boss Axel Weber warned investors against jumping on the bandwagon, saying the bubble would inevitably burst. "In my opinion, bitcoins are not money," he said, adding that the virtual currency had significant "design flaws".
Money is meant to fulfil three main functions and bitcoins fail at all of them, he said. The currency is not an effective means of payment since it is not universally accepted, it is not a good measure of value since prices are not written in bitcoins, and it is not an effective way to store value, since it is inherently unstable, he said.
The main problem, he said, is that with no central bank and no issuer controlling the supply, the value is determined solely by demand, which leads to "huge price fluctuations in both directions". UBS has decided to advise clients against investing in the virtual currency, he said, because the bank does "not consider it valuable and not sustainable". To protect investors who do not take the bank's advice, "regulators are needed," Weber said.