From renowned personalities to global institutions, everyone seems to have a strong opinion about cryptocurrencies.
While a few of those opinions rule in favor of these digital assets, others do not shy away from registering their apprehensions about this new financial class that has taken the world by storm when most people least expected it to do so.
The latest name to join – or rather, renew its membership to – the latter camp is none other than Deutsche Bank, whose Wealth Management segment head does not believe that this is an excellent time to invest in cryptocurrencies.
What do they have to say?
Markus Mueller, who is the Global Head of Chief Investment Officer for Deutsche Bank, recently stated that cryptocurrencies are not a recommended investment class for the financial institution and mentioned that it is “only for investors who invest speculatively.”
He elaborated that the asset class does not have a value of its own, with any price increase – such as the one noticed in December 2017 – only driven by speculation and imagination of market segments.
He further mentioned that investing in cryptocurrencies poses an immense risk due to their speculative nature, which could lead to a “total loss.”
Regulations are important
Muller also suggested that if cryptocurrencies want to be taken seriously for investment products, then they would require being more credible by eliminating volatility issues, which can be done by strengthening their reputation through proper regulations that could ensure their transparency and security.
“When security and trust are created, crypto-currencies can be assessed like established asset classes. It is possible that the governance required will exist in five to ten years from now.”
Speaking on this issue of “governance” and regulations, Muller mentioned that the approach of perceiving regulations as something negative only hurts cryptocurrencies and their reputation. He further stated that regulations only exist to prevent criminal activities and establish trust in said assets, and thus should be sought than avoided.
He also mentioned that due to these reasons, regulations are important for cryptocurrencies because they would be one of the major security assurances for this otherwise unknown asset class.
Explaining his point, he stated that regarding assurance, fiat has its own government to back it while gold has years of history as a physical commodity. In cryptocurrencies’ case, the situation is different. They are neither supported by governments nor have a physical existence, which is why it is all the more important for them to show some assurance which can only come with these regulations.
Blockchain is a clear winner
While Muller said that these developments could take years, he, like almost everyone else, was quite clear on acknowledging blockchain as a viable technology.
He mentioned that through cryptocurrencies, blockchain has already shown its potential in making transaction processing faster and economical.
Speaking about the now-famous comparison with the Internet, Muller said that blockchain technology could most certainly be “the most disruptive character for the finance sector and the public” next to the Internet, a technology that has made the very existence of this age’s everyday functions possible.