The US should ban cryptocurrencies, says Berkshire’s Munger
Charlie Munger at the Berkshire Hathaway press conference, April 30, 2022.
Berkshire Hathaway Vice Chairman Charlie Munger called on the US government to ban cryptocurrencies like China has done, arguing that a lack of regulation allowed for pathetic excess and a gambling mentality.
“A cryptocurrency is not a currency, a commodity or a security,” said 99-year-old Munger in one Opinion published in The Wall Street Journal Thursday.
“Instead, it’s a gambling contract with almost 100 percent house advantage that’s being entered into in a country where gambling contracts have traditionally been regulated only by states that compete on negligence,” Munger said. “Obviously the US should now enact new federal law preventing this.”
Munger and his business partner Warren Buffett are longtime cryptocurrency skeptics, claiming that they are not tangible or productive assets. Munger’s recent comments came as the crypto industry was plagued by problems ranging from failed projects to a liquidity crisis, exacerbated by the fall of FTX, once one of the world’s largest exchanges.
The cryptocurrency market has lost more than $2 trillion in value over the past year. The price of Bitcoin, the world’s largest cryptocurrency, has fallen 65% in 2022 and has recovered about 40%, according to Coin Metrics, to trade at around $23,824.
The renowned investor said that privately held companies have issued thousands of new cryptocurrencies in recent years and these have been publicly traded without prior government disclosure approval. Some have been sold to a promoter for next to nothing, prompting the public to buy at much higher prices without fully understanding the “pre-dilution in favor of the promoter,” Munger said.
He listed two “interesting precedents” that could lead the US to take sensible action. First, China has strictly banned services offering trading, order matching, token issuance and derivatives for virtual currencies. Second, the English Parliament banned all public dealings in new common stock beginning in the early 1700s and maintained that ban for about 100 years, Munger said.
“What should the US do after a cryptocurrency ban is introduced? Well, one more measure might be worthwhile: thanking the Chinese communist leader for his excellent example of unusual common sense,” Munger said.
(Read the full article in the Journal here.)
https://www.cnbc.com/2023/02/02/charlie-munger-us-should-ban-cryptocurrencies.html The US should ban cryptocurrencies, says Berkshire’s Munger