Swiss investment bank UBS says Bitcoin is in a “speculative bubble” and needs government permission not to fail.
In a whitepaper published a week ago, UBS, which is at the same time a major proponent of Blockchain technology, said demand for any cryptocurrency hinges on governments accepting it, of all things, for tax payments. The paper reads:
“If governments refuse to accept cryptocurrencies for tax payments, the single most important transaction in an economy, that significantly reduces demand for cryptocurrencies. Governments are highly unlikely to ever take this step.”
The tone of the bank is somewhat ironic given that its home country of Switzerland does in fact allow residents to pay municipal taxes with Bitcoin.
The pioneering move gained considerable media attention when it launched in Chiasso last month.
UBS, meanwhile, is a key player in the increasingly prominent Enterprise Ethereum Alliance, having joined on its inauguration in March. The non-profit organization has since gone on to include names such as the largest Russian banking institution, Sberbank.
While that organization’s members have varying views on cryptocurrency, UBS appears to remain steadfast in its suspicion.
“The relatively high volume of cryptocurrency turnover, against limited real-world use, suggests that many buyers are seeking speculative gain, never intending to use cryptocurrencies to make a real-world transaction. With each of the other characteristics of typical bubbles in evidence, a twenty-fold increase in Bitcoin prices in just two years, and an absence of any fundamental economic backing, cryptocurrency prices are almost certainly a bubble.”