ABN AMRO Private Banking: various crypto coin applications have potential, but lack regulations

Press release -

ABN AMRO Private Banking does not yet recognise crypto coins as a valid form of investment. It is also difficult to make a valuation of many crypto coins. Moreover, the ABN AMRO private bank argues that the lack of regulations, the fact that the technology is new and the fact that crypto coins are start-up business projects, presents an extremely high risk. In a new report, ABN AMRO Private Banking has identified four different types of crypto coins: crypto currency, network crypto, crypto security and utility crypto.

Richard de Groot, Global Head Investment Centre: "Of the four different use cases of crypto coins, crypto currency is the virtual version of a fiat currency, such as euros and dollars. Bitcoin is the best example of this. The network crypto, like Ethereum, is a digital trading platform of such things as digital real estate contracts. Crypto security is a digital form of a share or bond. Finally, the utility crypto is a platform for trading in such things as green energy."

Investment in ICOs extremely high risk

If startup entrepreneurs want to make money with a business plan, one way to do this is by issuing a crypto security. The issue of this coin is known as an ICO (Initial Coin Offering). Investors can invest in this. The big difference between an ICO and a traditional share issue, an IPO (Initial Public Offering), is that with an IPO companies are often further on in their lifecycle. De Groot: "Investing in an ICO project is thus much more high risk and is comparable with investing in private equity or venture capital. Moreover, as investor you are competing with professional investors."

Not offered as investment

The non-transparent character, the lack of regulations and the high risk are the reasons that ABN AMRO Private Banking is not offering crypto coins as investment. The private bank will also not be issuing advice on this subject. However, De Groot is not ruling out that crypto coins may develop into a valid form of investment in the future. "For now, we do not view this as a form of investment, but the underlying technology is currently undergoing rapid development. If conditions regarding regulations and transparency are met, then crypto coins could be viewed as being similar to other forms of investment with similar risk-return profiles. At that point we will also be able to advise our customers about these crypto coins."

Reaching the peak

Last year, the hype regarding crypto coins reached a (provisional) peak, when the values skyrocketed. The values have now fallen considerably, partly because a large group of people have withdrawn from the crypto coin market. According to research agency, Kantar, over 100,000 Dutch citizens have already done this, although 480,000 Dutch investors still have money invested in crypto coins.

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