UBS boss warned about Bitcoin’s dilemma

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.

"In my opinion, bitcoins are not money," Axel Weber, chairman of Swiss financial giant UBS, said in an interview to Swiss news agency NZZ am Sonntag on Sunday.

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.

In the interview, UBS boss Axel Weber warned investors against jumping on the bandwagon, saying the bubble would inevitably burst." 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 supply, the value is determined solely by demand, which leads to “huge price fluctuations in both directions.” UBS is advising clients against investing in the currency because the bank does “not consider it valuable and [it is] not sustainable.”

The statement comes after Bitcoin broke a threshold of $20,000 earlier today prior to the launch of Bitcoin futures trading at the Chicago Mercantile Exchange (CME).

Since the beginning of 2017, the price of Bitcoin has skyrocketed, from $997 on January 1 to nearly $20,000 by mid-December. The futures are believed to further increase its value and result in wider acceptance of the cryptocurrency on the financial markets.

Earlier this month, Denmark's Saxo Bank issued a report dubbed "Outrageous Predictions" predicting Bitcoin's phenomenal growth to the value of some $60,000.