February 6, 2023: Berkshire Hathaway Vice Chairman Charlie Munger urged the U.S. admin to ban cryptocurrencies, as China experienced, arguing that a lack of regulation allowed wretched excess and which gamblers’ mentality.
“A cryptocurrency is not profit, not a commodity, and not a security,” the 99-year-old Munger stated in an op-ed in The Wall Street on Thursday.
“Instead, it’s a gambling contract with almost 100% edge for the house, joined into in a country where gambling contracts are traditionally regulated by states that compete in laxity,” Munger said. “The U.S. should enact a new federal law preventing this from happening.”
Munger and his partner Warren Buffett are longtime cryptocurrency sceptics, contending they are not tangible or productive assets. Munger’s recent comments came as the crypto industry was plagued with issues from failed projects to a liquidity crunch, exacerbated by the decrease of FTX, once one of the largest exchanges in the world.
The cryptocurrency market lost over $2 trillion in value last year. The price of bitcoin, the world’s significant cryptocurrency, will zoom 65% in 2022, and it has rebounded by 40% to trade at around $23,824, according to Coin Metrics.
The renowned investor stated in the previous few years, privately owned firms have issued thousands of recent cryptocurrencies, and they have become publicly traded without any administration preapproval of disclosures. A few have been sold to a promoter for nothing, after which the public buys in at much higher costs without fully understanding the “pre-dilution in favour of the promoter,” Munger states.
He lists two “interesting precedents” that may guide the U.S. into good action. First, China prohibits services that offer trading, order matching, token issuance and derivatives for currencies. Second, Munger said that from the 1700s, the English Parliament banned all public trading in recent common stocks and is keeping the ban in place for regarding 100 years.
“What should the U.S. do following a ban on cryptocurrencies? Well, one more action making sense; thank the Chinese communist leader for his superb model of uncommon sense,” Munger said.
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