BOCI, a leading Chinese financial institution, has issued the first tokenized security in Hong Kong, reaching a milestone in digital finance. The CNH 200 million fully digital structured notes, originated by UBS, have been placed with clients in Asia Pacific, indicating a significant collaboration between BOCI and UBS in the digital structured notes arena.
This development comes after UBS’s issuance of a USD 50 million tokenized fixed rate note in December 2022, under English and Swiss law, on a permissioned blockchain. The latest venture takes a step forward, marking the first product of its kind in Asia Pacific, constituted under Hong Kong and Swiss law, and tokenized on the main Ethereum blockchain.
Both BOCI and UBS are pioneering the use of blockchain technology to enhance efficiency in high-frequency issuance activities. Ms Ying Wang, Deputy CEO at BOCI, expressed the institution’s dedication to driving the simplification of digital asset markets and products through blockchain-based digital structured products. She also highlighted BOCI’s commitment to promote the digital transformation of Hong Kong’s financial industry.
Meanwhile, UBS continues to broaden its tokenization services, targeting structured products, fixed income, and repo financing through its UBS Tokenize platform. Aurelian Troendle, Global Head of MTN Trading at UBS AG, emphasized the potential benefits blockchain technology can offer to investors.
This milestone achieved by BOCI and UBS signals a new era of digital securities, paving the way for further innovations in the field.
UBS would be able to reduce the size of Credit Suisse’s investment bank as a result of the purchase, with the combined firm constituting no more than a third of the newly combined business. A merger between UBS and Credit Suisse would result in the creation of one of the biggest and most systemically significant financial institutions in Europe. UBS has total assets on its balance sheet worth $1.1 trillion, while Credit Suisse has total assets at $575 billion.
Bypassing the typical Swiss regulations that call for a six-week consultation period during which shareholders can express their opinions on an acquisition, the emergency measures that are currently being considered would make it possible for the transaction to move forward without the approval of the company’s shareholders. Reportedly, the SNB and FINMA are aiming to secure a regulatory agreement by the end of the day on Saturday in order to conclude the purchase before to the opening of markets on Monday.
Credit Suisse has been shaken by a slew of financial scandals, the most notable of which are the failure of Greensill Capital, which had a portfolio worth $10 billion with Credit Suisse, and the loss of $4.7 billion as a result of the failure of family office Archegos Capital Management. In addition to this, legal action may be taken against the bank because of its part in the fall of supply chain financing company Lex Greensill’s corporate empire.
The Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority (FINMA) had previously issued a joint statement on March 15, stating that Credit Suisse met the requirements imposed on systemically important banks regarding their capital and liquidity, and that should it be required, the SNB would provide Credit Suisse with liquidity. But, the authorities now feel that the only option to avert a complete collapse in trust in the bank is for UBS to purchase Credit Suisse.
The announcement of this news comes after the United States-based investment firm BlackRock indicated in a tweet on March 18 that it is not interested in purchasing Credit Suisse.
As the majority of the world’s Central Banks are now developing or researching the prospects of Central Bank Digital Currencies (CBDCs), the Society for Worldwide Interbank Financial Telecommunications has detailed how these individual CBDCs can co-exist in a global setting.
As detailed by SWIFT‘s head of innovation Nick Kerigan, the trial involved as many as 14 central and commercial banks, including the Deutsche Bundesbank, Banque de France, Standard Chartered, UBS, and HSBC saw all these participating entities connect through a single hub.
“We believe that the number of connections needed is much fewer,” Kerigan said. “Therefore, you are likely to have fewer breaks (in the chain) and you are likely to achieve greater efficiency.”
The trial is billed to be followed by more detailed and specific testing in the coming months, with additional perspectives set to be investigated.
SWIFT is an electronic system that allows banks all over the world to send information and payments to each other, following its 8-month investigation into the cross-border transaction capabilities of CBDCs concluded that a single viable central connection can suffice in keeping all of the individual e-fiat notes together.
While SWIFT has a very viable proposal to connect CBDCs the way it has connected financial players transacting using fiat and digital money, the body may have an unexpected rebuttal to deal with.
With the outbreak of the war between Russia and Ukraine, SWIFT blocked financial institutions from Russia in compliance with broader financial sanctions from Western watchdogs. This move may prevent some Central Banks from linking their CBDCs to the SWIFT system for any likely instance of censorship in the future.
While this fear remains a viable one, Kerrigan believes the focus for partners will be different.
“Ultimately, what most central banks are looking to do is to provide us with a CBDC for the people, the businesses and the organisations in their jurisdiction,” he said, “So a solution that’s fast and efficient and that gains access to as many other countries as possible would seem to be an attractive one.”
According to a Bloomberg report, the ultra-rich clients of Goldman Sachs are interested in cryptocurrency.
An Ever-growing Interest
The news agency quoted a recent survey from the American financial giant, which shows that almost half of the family offices interviewed are keen to add crypto to their investments.
Family offices specialize in managing the wealth and personal affairs of thewealthiest peoplein the world. The survey gathered responses from 150 family offices worldwide, with nearly one-fifth of those firms boasting up to $5 billion in assets under management.
Goldman Sachs found that 45% of the participating firms are looking into crypto assets as a hedge against inflation, which the U.S. Treasuryforecastswill skyrocket in the coming months. Moreover, the survey found that 15% of respondents already have exposure to cryptocurrencies.
According to Melina Flynn, the Global Co-Head of private wealth at Goldman Sachs, many family office clients want to invest in the digital asset ecosystem and its underlying blockchain technology.
“The majority of families want to talk to us about blockchain and digital ledger technology. There are many who think that this technology is going to be as impactful as the internet has been from an efficiency and productivity perspective,” Flynn told Bloomberg.
JPMorgan Clients View Crypto as an Asset Class
In other positiveadoption news, JPMorgan claims that many of its clients are demanding exposure to cryptocurrencies.
According to Mary Callahan Erdoes, an exec at the giant investment bank, more clients view bitcoin as a viable asset class. She added that the bank would continue offering crypto investment services to keep its user base happy.
That said, Erdoes expressed concerns about the crypto market’swild volatility, arguing that JPMorgan isn’t completely sold on bitcoin as an asset class per se.
Back in 2017, the company’s CEO, Jamie Dimon, referred to bitcoin as a fraud. However, the banking giant has slowly softened its stance on bitcoin as demand for crypto continues to mount.
JPMorgan is now reportedly planning to launch an actively managedBitcoin fund, which would make it the largest bank to embrace crypto as an asset class.
UBS Bank CEO Says Crypto is An Untested Asset Class
Not everyone is convinced that crypto has matured into a viable asset class, with some financial experts expressing doubts over the long-term value of digital assets.
In a recent interview withBloomberg, the CEO of Swiss-based UBS bank, Ralph Hamers, blasted crypto as an untested asset class, citing its extreme volatility.
Hamers explained that although some UBS clients have expressed fear of missing out on the bitcoin gold rush, the banking institution plans to err on the side of caution and will not offer crypto actively.
Ralph Hamers, CEO of Swiss bank UBS, has said he does not fear missing out on crypto. Speaking to Bloomberg on Tuesday, Hamers said, “Clients are looking at different alternatives, and they hear about crypto, and there is a bit of a fear of missing out as well. They read it in the papers, but they also see the volatility.”
Commenting on the bank’s approach to providing exposure to crypto for its wealth management clients, the UBS CEO stated:
“We don’t offer it actively […] We feel that crypto itself is still an untested asset category.”
Back in May, reports emerged of UBS planning to offer crypto investments to rich clients. At the time, the proposed product was limited to a small fraction of the portfolios held by the bank’s wealth management clientele due to the volatility of cryptocurrencies.
However, in June, the bank warned customers to avoid crypto investments stating that the market will crash under pressure from regulators.
Meanwhile, the Swiss branch of Spanish banking giant BBVA already offers Bitcoin trading and custody solutions for clients in the country. Several Swiss banks, like the 170-year-old Bordier & Cie, are also offering crypto trading services.
Related:‘Investors stay clear’: UBS warns regulators could pop ‘bubble-like crypto markets’
Hamers doubled down on the UBS’ reticence regarding crypto, stating that he does not have FOMO about the bank missing out on a few wealthy clients looking to invest in crypto.
While the UBS CEO appears not to be sold on crypto, banks in the United States are increasingly abandoning their previous anti-cryptocurrency stance and offering digital asset investment products.
As previously reported by Cointelegraph, NYDIG has partnered with a host of internet banking providers to allow several U.S. banks to offer Bitcoin (BTC) trading to their customers. In July, Bank of America reportedly created a crypto research team, dubbing cryptocurrency “one of the fastest-growing emerging technology ecosystem.”
According to a Swiss-based UBS investment bank survey, central banks are sceptical to cryptocurrencies and supplant gold as a safe store of value.
UBS’s research surveyed 30 major central banks. The study shows that almost 85% of central bank reserve managers do not expect crypto-assets to replace gold in their currency reserves.
Furthermore, over 25% of the central bankers stated that Bitcoin and other cryptocurrencies have the markings of investment, potentially as uncorrelated assets which do not move in tandem with other markets. The study further shows that 57% of those polled mentioned that they do not expect crypto tokens to impact their reserve operations significantly.
However, analysis like Joshua Scigala, Co-Founder of decentralised crypto finance project TheStandard.io, disagree with central banks’ stance on the role of cryptocurrencies, he said:
“When I hear Central bankers state that they don’t see much role for cryptocurrencies as a store of value over gold, it shows a complete lack of understanding. Cryptocurrencies are incredibly diverse and enable many functions that will leave central banks looking like dinosaurs if they do not keep up.”
Yet, there is a different story as several crypto advocates see cryptocurrencies as a way to preserve the value of their savings at a time when central bankers across the globe unveiled massive stimulus packages to fight the COVID-19 pandemic amid rising fear of higher inflation.
Meanwhile, cryptocurrency volatility has distanced several traditional investors from the asset class and affected its attraction as a stable store of value. Luke Sully, CEO at treasury technology specialist Ledgermatic – a company that allows corporates to hold and use cryptocurrencies compliantly, explain:
“Bitcoin as a foreign currency reserve cannot be publicly supported by any central bank for one simple reason; that it is not controlled by any nation-state. Aside from El Salvador, which recently permitted bitcoin as legal tender in the country, it’s mostly used by investors – retail and institutional – as a high-risk investment. “
Central bankers’ cautious sentiment comes when the crypto industry’s growth has exploded in recent years and has prompted regulators to contemplate more seriously how to regulate such assets and to what extent they should play a role in their operations.
While central bankers have doubts about the role of private crypto assets, they are increasingly confident about the prospect of the Central Bank Digital Currencies.
The research shows that central bankers are optimistic about the outlook of CBDCs as they consider how to respond to the booming of the crypto sector. More than 80% of central bank reserve managers stated that they expect such institutions to develop CBDCs directly accessible to consumers over the next five years.
Officials surveyed said that central bankers’ motivation to pursue their digital currencies is to enhance the retail payment system and upgrade the broader financial infrastructure, including major functions like clearing and regulations. They also mentioned that CBDCs could assist in reducing money laundering and crime.
CBDC As Opportunity for The Monetary System
Central bankers are accelerating their work on CBDCs’ development, and investors are making observations.
About 80% of central banks are researching the use cases involving CBDCs, with 40% (such as China, Australia, Singapore, Japan, Thailand, and others) already testing proof-of-concept programs.
Facebook-based cryptocurrency Diem is motivating several central banks to create CBDCs. Diem, formerly Libra, formed a partnership with Silvergate bank to test the US dollar-pegged stablecoin later this year.
The creation of Diem has been regarded as a catalyst for China to accelerate its plans for its digital yuan issued by the country’s central bank.
China is close to launching its CBDC and is testing the digital yuan with commercial institutions and the public. The country maintains plans of establishing itself as a key player in the emerging global digital currency market.
In contrast, the US Federal Reserve is taking a more cautious approach to issue a Central Bank Digital Currency with no robust commitment to date.
Cambodia and the Bahamas are the only countries that have so far launched their CBDCs for public use.
Swiss multinational investment banking giant, UBS, has warned its clients that crypto assets cbe unsuitable for professional investors if regulatory pressure continues.
In a note sent to clients last week, the global wealth management team at UBS said China’s latest crackdown had hurt crypto prices and operators, cautioning that further regulatory pushback worldwide could exacerbate the downward pressure on digital asset prices:
“Regulators have demonstrated they can and will crackdown on crypto, so we suggest investors stay clear and build their portfolio around less risky assets. We’ve long warned that shifting investor sentiment or regulatory crackdowns could pop bubble-like crypto markets.”
While UBS acknowledged that further crypto gains could be possible, they emphasized the risks the speculative asset class could pose to investors:
“While we can’t rule out future price gains in cryptos, we see this as a speculative market that poses significant risks to professional investors.”
The Swiss bank also warned about leveraged trading, stating “Crypto trading practices, such as extending 50X or 100X leverage, appear fundamentally at odds with mainstream finance regulation.”
The renewed Chinese crackdown on Bitcoin mining operations, which began in late April, has seen mixed analysis from the crypto community, with some arguing the migration of hash power from China offers the Bitcoin mining industry an opportunity to improve its ecological footprint and to further decentralize the network.
The banks see it differently, however, with UBS fearing that China’s actions will create a cascade effect around the world from financial regulators.
UBS’ prediction already appears to be coming true with the United Kingdom’s Financial Conduct Authority taking action against the world’s largest digital asset exchange, Binance, on June 27.
Related:Binance disappointed by Barclays’ ‘unilateral action’ to block customer payments
A number of leading high street banks in the U.K. including TSB, NatWest, and Barclays, have limited their customers’ access to crypto exchanges since the FCA took action against Binance in late June.
In May, Cointelegraph reported that UBS was rumored to be working on launching crypto trading services for wealthy clients.
Switzerland-based banking firm, UBS Group is looking at several options to bring cryptocurrency-based investments to its rich clients.
According to a Bloomberg report on the matter, the company is reportedly considering crypto investments as a response to the demand from its customers.
The move comes at a time when cryptocurrencies are gaining massive traction among retail and institutional investors. The crypto space has moved from obscurity into the mainstream, a development that is marked by a market capitalization of over $2.3 trillion. According to the cited sources, the potential move by UBS to offer crypto investments is in its effort to remain competitive and prevent its rich clients from seeking similar products from competitors already offering those services.
“We are monitoring the developments in the field of digital assets closely,” UBS said in a statement. “Importantly, we are most interested in the technology which underpins digital assets, namely the distributed ledger technology.”
Per the reports, the cryptocurrency investment option UBS is planning to offer to only take a fraction of its client’s net worth, in order to shield investors from the extreme volatility of the digital currency ecosystem. One of the options that are billed to be explored is investments through third-party investment vehicles.
While the UBS crypto investment move will be welcomed if it is fully confirmed, the bank appears to be a bit late to the party. Global competitors Goldman Sachs and Morgan Stanley are already exploring crypto options in response to an acknowledged shift in broader crypto demand. While Goldman Sachs is on track to offer a Bitcoin service and is looking to hire a new VP to expand its digital asset offerings, Morgan Stanley ranked as the first major bank to offer Bitcoin funds to its clients.
The UBS plans will not be a misstep, with many market experts projecting a continuous growth in retail and institutional demands for cryptocurrency-based products.
Swiss multinational investment banking giant UBS Group AG is looking at ways to give its wealthy clients exposure to digital assets.
UBS Could Offer Cryptocurrency Investment Service
According toBNN Bloombergon Monday (May 10, 2021), people knowledgeable with the matter told the news outlet that UBS is exploring different alternatives to offer its clients the opportunity to invest in digital assets. The sources also said that the investment bank could use third-party investment vehicles as one of its options.
Also, UBS is reportedly in the early stages of its plan to offer cryptocurrency investments. Meanwhile, the anonymous sources say that the investment offering would be “a small portion” of the bank’s clients’ wealth, in order to hedge against volatility associated with the ascent industry.
The cryptocurrency industry continues to see increased retail and institutional adoption, with financial institutions showing interest in bitcoin and other crypto assets. Interestingly, in the past, these banks would not want to have anything to do with the crypto industry; but all that seems to be changing.
As previouslyreportedbyBTCManagerback in March, German private bank Donner & Reuschel announced that it was preparing to introduce crypto buying and custodial services for its clients. The bank decided to launch the services following increased demand for digital asset custody from its customers.
Also, Wall Street financial institutions are trying to enter into the trillion-dollar crypto market, by either offering crypto services or buying cryptocurrency. There were reports in March that the investment banking giant JPMorgan wasconsideringdeveloping a cryptocurrency clearinghouse service. The bank is alsopreparing to launchan actively manged bitcoin fund for private wealth clients.
Another Wall Street banking giant Goldman Sachs is planning tooffer investmentsin bitcoin and other crypto assets to its private wealth clients. Meanwhile, in its earnings call in April, a Goldman Sachs executive said that the bank was closelypaying attentionto bitcoin.
State Street is set to launch acrypto trading platform, which could launch later in 2021. Other major financial institutions such as America’s oldest bankBank of New York Mellon(BNY Mellon) and Citbank are also exploring cryptocurrency services.
Swiss investment bank UBS Group AP is reportedly planning to offer cryptocurrency investments, which would likely include bitcoin exposure.
Major Swiss investment bank UBS Group AG is reportedly planning to offer cryptocurrency investments, likely including bitcoin exposure, to wealthy clients.
“The Swiss firm is exploring several alternatives for offering the asset class, people familiar with the plan said,” according to Bloomberg. “Any investment offering would be a very small portion of the clients’ total wealth because of the volatility, while options include investing through third party investment vehicles, one of the people said.”
Sources also voiced concern that clients would leave UBS if it did not start offering some sort of cryptocurrency investment options to its clients. Recently, many of its highest-profile competitors have signaled their plans to grant bitcoin exposure to their own clients.
For instance, this year, BNY Mellon has announced a bitcoin strategy for its clients, Morgan Stanley has announced plans to allow clients to invest in bitcoin funds and Goldman Sachs has shared details around its work to offer BTC investment vehicles and recently offered bitcoin derivatives.
It’s still unclear how or when the Swiss firm will broach cryptocurrency offerings, or how much it will emphasize bitcoin specifically. But a major legacy institution such as UBS is likely to start with BTC offerings first, an increasingly-popular asset among wealthy investors.
“UBS Chief Executive Officer Ralph Hamers is taking a deep look at where he can cut costs and digitize operations, including the high-touch business of serving the world’s wealthiest,” per Bloomberg. “The bank spends approximately $3.5 billion per year on technology to maintain and modernize its existing infrastructure and innovate new tools for employees and products for clients.”