Axel Weber, the board chairman of big bank UBS, has warned of a possible Bitcoin currency crash. With increasing numbers of small investors jumping on the cryptocurrency bandwagon, it is time for regulators to intervene, he says.
Bitcoin has surged from $1,000 (CHF990) at the start of the year to above $16,000.
The risks are due to a design fault, which leads to huge currency swings in both directions, Weber said in an interview with the NZZ am Sonntagexternal link. “We as a bank have very consciously warned against this product, because we do not consider it valid and sustainable,” said Weber.
As small investors are getting involved, the financial regulator should get involved to ensure that uncontrolled price swings are reined in, he added.
His comments come after Swiss National Bank Chairman Thomas Jordan said on Thursdayexternal link that virtual currencies like bitcoin presented no risks to monetary policy but warned that investors should be aware of the dangers from big price swings.
Bitcoin is a digital currency that enables individuals to transfer value to each other and pay for goods and services bypassing banks and the mainstream financial system.
While banks have largely steered clear of bitcoin since it emerged following the financial crisis, the virtual currency has many supporters.
Meanwhile, Swiss regulator has given ample warning that crypto services, depending on what form they take, may end up meeting securities, banking and anti-money laundering laws.
swissinfo.ch and agencies/ilj