UBS Mulls Offering Prime Brokerage Services for Crypto ETPs to European Hedge Funds: Sources

The Swiss bank is operating a pilot program with plans to possibly launch a wider rollout to clients in a few months, one source said.

AccessTimeIconJul 28, 2021 at 2:02 p.m. UTC
Updated May 9, 2023 at 3:22 a.m. UTC
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UBS Group’s prime brokerage unit has started to offer the clearing and settlement of crypto exchange-traded products (ETPs) to a very limited number of clients, according to two people with knowledge of the matter.

The Swiss bank is operating a pilot scheme and the matter is being reviewed internally, ahead of a planned wider rollout later in the year, one of the sources said.

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  • UBS isn’t alone in making such a move. Both Goldman Sachs and Bank of America, as reported by CoinDesk last week, have also been offering the clearing and settlement of cryptocurrency ETPs for hedge funds, as financial institutions continue to make tentative steps toward the adoption of crypto. Banks are keen to avoid missing out on a potentially lucrative revenue stream as more clients seek access to the sector.

    Bank of America has also approved the trading of bitcoin futures for some clients and is clearing cash-settled contracts.

    For UBS, the latest development comes despite the company’s stated caution regarding crypto. In a recent note to clients UBS raised concerns over the nature of crypto markets and recent regulatory developments.

    “Regulators have demonstrated they can and will crack down on crypto,” UBS said in a report. “We suggest investors stay clear and build their portfolio around less risky assets.”

    The warning followed prior reports that the lender was in the early stages of exploring ways of offering crypto to wealthier clients.

    Obviously, these concerns haven’t prevented some UBS clients from wanting to get in on the action or deterred UBS from considering obliging them.

    A UBS spokesperson declined to comment.

    Previously, the bank has said that it was monitoring the developments in the field of digital assets closely and that it was most interested in the technology that underpins digital assets, namely distributed ledger technology.

    Bitcoin, the world’s oldest crypto, rose back above $40,000 this week, following a subsequently denied report that Amazon was looking to accept bitcoin payments by the end of the year and was also considering minting its own token by 2022.

    “Notwithstanding our interest in the space, the speculation that has ensued around our specific plans for cryptocurrencies is not true,” an Amazon spokesperson told CoinDesk by email Monday. Separately, Amazon did say last week that it’s looking to hire a “digital currency and blockchain product lead.”

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