The speculation around bitcoin is the “very definition of a bubble,” Credit Suisse Group AG Chief Executive Officer Tidjane Thiam said as the currency exceeded $7,000 for the first time.
“From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble,” he said at a news conference in Zurich Thursday. He added that in the history of finance, such speculation has “rarely led to a happy end.”
The digital currency got new impetus this week after CME Group Inc., the world’s largest exchange owner, said it plans to introduce bitcoin futures by the end of the year, citing pent-up demand from clients. That pushes bitcoin closer to the mainstream by making it easier to trade without the hassles of owning bitcoin directly.
Other bankers are also sounding warnings about the currency. JPMorgan Chase & Co Chief Executive Officer Jamie Dimon has called bitcoin “a fraud” that will eventually blow up. UBS Group AG Chairman Axel Weber said last month that bitcoin has no “intrinsic value” because it’s not secured by underlying assets.
Bankers also are steering clear of bitcoin for fear that criminals could use its anonymity to hide their activities, Thiam said.
“Most banks in the current state of regulation have little or no appetite to get involved in a currency which has such anti-money laundering challenges,” he said.
While bitcoin remains a no-go with the industry, banks are racing to develop blockchain, the technology underpinning the currency. Thiam said blockchain may have many applications in banking. Credit Suisse is among more than 100 banks are working within the R3, a consortium created to find ways to use blockchain as to track money transfers and other transactions.
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