Cryptocurrency investing is like gambling, warns Julius Baer CEO

The head of the Zurich-headquartered Swiss private banking group says that blockchain technology is here to stay, but that cryptocurrencies are speculative and volatile
Cryptocurrency investing is like gambling, warns Julius Baer CEO
Hodler added, however, that cryptocurrencies “are a bit different.”
By Bernd Debusmann Jr
Tue 27 Mar 2018 11:40 AM

Investing in cryptocurrencies is similar to “gambling”, according to the CEO of Swiss private banking group Julius Baer Group.

In an interview with Arabian Business in Dubai, Julius Baer CEO Bernhard Hodler said that he makes an important distinction between cryptocurrencies and the underlying blockchain technology behind them.

“Blockchain, I think, is here to stay. We have looked at it already for some applications,” he said. “I think it will change the landscape, not only within banking.”

Hodler added, however, that cryptocurrencies “are a bit different.”

“I think it’s a lot of speculation. There’s a lot of volatility, and nobody knows which cryptocurrencies will make it,” he said. “I personally think some will make it, because the idea behind it isn’t completely bad, but we do not advise our clients to speculate in the cryptocurrency field.

We give them [clients] access to structured products, if they want, but we tell them it’s a bit [like] gambling,” he added.

In a December 2017 statement posted to its website, Julius Baer noted that the bank is “negative” on Bitcoin and other currently existing cryptocurrencies “from a long-term fundamental standpoint.”

“We believe, counter-intuitively, that blockchain-based ‘coins’ are actually extremely deficient currencies, as their terminal coin supply and their velocity are both capped, making them highly deflationary,” the statement noted. “Their ‘safe haven’ function is a more convincing use case, but we believe issues also abound in that context.”

The statement noted that although cryptocurrencies and blockchain are “an amazing technological development”, Julius Baer is also concerned by reports of fraud in the initial coin offerings (ICO) space and market manipulation on cryptocurrency exchanges.

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