ABN AMRO doesn't yet see an investment case for cryptocurrencies

• In response to enormous interest, ABN AMRO will share its vision on cryptocurrencies in a series of three articles

• Lack of regulation and valuation still blocking the path to investing in cryptocurrencies

• Cryptocurrencies don’t necessarily lead to lower correlations and more diversification within a portfolio

ABN AMRO to publish a series of three articles on cryptocurrencies

Investors, governments and media are very interested in cryptocurrencies, many wanting toknow whether cryptos are ready to be included in investment portfolios. ABN AMRO says there are still too many uncertainties. The bank has conducted research into cryptocurrencies in the past six months and is presenting its findings in a series of three articles. Today, part one is being published: “Cryptocurrencies as an investment”.

Lack of regulation and transparency

ABN AMRO concludes that investing in cryptocurrencies is too risky as yet because there are still many uncertainties. Cryptocurrencies do not qualify as a financial instrument and, as such, are not subject to supervision by the Netherlands Authority for the Financial Markets. “The lack of regulation and transparency around cryptocurrencies means they are still strongly speculative, so they carry a risk of substantial losses. Plus which, future valuation is still tricky. ABN AMRO believes the risk associated with cryptocurrencies makes them unsuitable for investment,” says Ralph Wessels, Head of Investment Strategy at ABN AMRO.

Added value for investment portfolio as yet unclear

ABN AMRO notes that, viewed exclusively as a possible investment, the risk/return profile of cryptocurrencies is closest to that of venture capital. In theory, cryptocurrencies as an investment category should lead to lower correlations and more diversification in a portfolio. But research into this is inconclusive. All in all, the bank advises caution regarding whether cryptocurrencies should be included in an investment portfolio.