Pictet cautions against crypto investment in private banking

A Swiss investment service company Pictet has issued a warning against crypto investment as the crypto industry experiences prolonged turmoil.

Pictet’s Asia CEO Tee Fong Seng said that while crypto is an asset that “we cannot ignore”, private bankers and banks should not incorporate it into their portfolios for the time being. According to Tee, Pictet has created a team to monitor the crypto industry.

The executive made the statement during a panel at the Bloomberg Asia Wealth Summit held on Thursday in Singapore.

Various crypto assets have seen bear market trends this year. The valuation dropped significantly even if some assets had shown high value a few months ago. For example, Bitcoin reached its all-time high value in November 2021. However, its valuation has plummeted in recent months and even went below $20,000.

Hedge fund Three Arrows Capital (3AC), which funded some renowned crypto startups, also declared bankruptcy last month. There are other funding agencies that ended up like 3AC this year.

Another problem reported in regards to crypto assets was numerous hacking attacks on the blockchain system. Bloomberg reported that in June 2022, an attack on the Harmony cryptocurrency bridge enabled the hackers to steal more than $100 million.

At the beginning of August, there was also a report of hacking on 7,900 Solana wallets which led to the loss of crypto assets worth $5.2 million.

Polarized opinions

Large banking companies have warned against cryptocurrency for years. Jamie Dimon, the chief executive officer for JPMorgan Chase & Co., named Bitcoin a “fraud” back in 2017. Dimon reportedly said that he would fire employers trading the crypto coin.

Expert investor Jim Rogers who also participated in Bloomberg’s Singapore Wealth Summit was among the side that did not believe in the crypto industry.

“My wife invested in crypto of all things,” Rogers said. “I don’t invest in them because the bulls say there’s going to be money. My answer to that is if and when all our money is on the computer, it’s going to be government money.”

Rich Teo of blockchain company Paxos Asia thought that the crypto market prospect was “bearish”.

Teo said, “I think there will be more deleveraging of crypto.”

Nonetheless, as some crypto assets had shown an increase in value, some bankers started to develop a different opinion. They started to encourage clients to diversify portfolios with crypto assets.

Julius Baer Group Ltd. has started to offer a wider cryptocurrency service to its clientele. According to Baer’s chief executive officer, Philipp Rickenbacher, crypto has “transformative potential”.

Fidelity Investments is in the middle of preparing to launch a workplace retirement program that involves Bitcoin investment.

During the Singapore summit, Tee linked the instability of the crypto market in the last couple of years to the decision of introducing crypto products to investors.

“If you look at the volatility for the last two years, you can make a lot of money, you can lose a lot of money,” Tee said. “The question is, when do we bring the clients into the picture?”

Citigroup Inc. and Morgan Stanley are among investment companies that offer consultation services for clients wanting to invest in cryptocurrency.