UBS Chair Says Blockchain Is Unstoppable But Dodged Bullet With Crypto – Ledger Insights
During the World Economic Forum event in Davos, UBS Chairman Colm Kelleher spoke about cryptocurrencies and blockchain. He is very optimistic about blockchain, but looks for regulation around crypto.
“Technology is unstoppable,” Kelleher said. “Blockchain technology will reduce a lot of operational friction, reduce costs and, properly leveraged, will be a very good value addition to the chain.”
While Kelleher only joined the UBS board in 2022, the bank has one of the longest histories in blockchain technology. It initiated the Utility Settlement Coin, a settlement token backed by central bank reserves. It changed to Fnality, now owned by 17 institutions and recognized as a systemically important payment system in the UK. A launch is planned this year.
However, Kelleher has reservations about cryptocurrencies. He believes that banks in their current form “cannot possibly justify selling that product”. And he was grateful that cryptocurrencies did not become systemically important during the last crypto boom.
“We had investors who wanted to invest in coins,” the UBS chairman said. “And we had to draw a line on what was appropriate for these investors. What is our fiduciary duty? And by the way, what is our compliance responsibility? And we hadn’t answered those things.”
“And in many ways I think we dodged a bullet because this thing exploded very quickly. But it will come back in one form or another. And we’re looking for the regulatory framework that will allow us to accommodate that for our customers.”
On a related note, when asked what he considers the biggest risks on the horizon, he is concerned about geopolitical issues and the non-bank financial sector (NBFI). That would include crypto, but he wasn’t talking about crypto at the time.
“Banks and insurance companies are well regulated,” the UBS chairman said. “I think they are systemically safe, we could argue. But I think regulators have respectfully taken their eye off the ball when it comes to the non-bank NBFI sector. And they’re looking at risks that come from that through a banking lens rather than through a general control lens.”
Outside of crypto, UBS has embraced blockchain in a big way. Last November, it issued probably the largest blockchain bond of CHF 375 million ($410 million) on SIX Digital Exchange (SDX) with a dual listing on SIX, but the entire issue naturally on the blockchain.
It is also a participant in Fnality, the Broadridge DLT repo offering, the HQLAX DLT security management network, and the FundsDLT blockchain distribution platform, among other initiatives.
