Charlie Munger says the US should follow in China’s footsteps and ban cryptocurrencies
Charlie Munger at the Berkshire Hathaway press conference, April 30, 2022.
CNBC
Berkshire Hathaway Vice Chairman Charlie Munger has urged the US government to ban cryptocurrencies, as China has done, arguing that a lack of regulation allows for miserable excesses and a gambling mentality.
“A cryptocurrency is not a currency, nor a commodity, nor a security,” Munger, 99, said in a column published in the Wall Street Journal Thursday.
“Instead, it’s a gambling contract with a nearly 100% house advantage, made in a country where gambling contracts have traditionally been regulated only by states that compete with laxity” , Munger said. “Obviously, the United States should now enact new federal law that prevents this from happening.”
Munger and his business partner Warren Buffett have been longtime cryptocurrency skeptics, saying they are not tangible or productive assets. Munger’s latest comments came as the crypto industry was plagued with issues ranging from failed projects to a liquidity crunch, exacerbated by the fall of FTX, once one of the biggest exchanges in the world. world.
The cryptocurrency market lost over $2 trillion in value last year. The price of bitcoin, the world’s largest cryptocurrency, plunged 65% in 2022 and it rebounded around 40% to trade around $23,824, according to Coin Metrics.
The renowned investor said that over the past few years, private companies have issued thousands of new cryptocurrencies and they have gone public without any prior government approval of disclosures. Some were sold to a developer for next to nothing, after which the public bought at much higher prices without fully understanding the “pre-dilution in favor of the developer,” Munger said.
He listed two “interesting precedents” that could guide the United States to wise action. First, China has strictly banned services offering trading, order matching, token issuance and derivatives for virtual currencies. Second, from the early 1700s, the English Parliament banned all public trading of new ordinary shares and kept that ban in place for about 100 years, Munger said.
“What should the United States do after a cryptocurrency ban is in place? Well, another action might make sense: thank the Chinese communist leader for his magnificent example of common sense,” Munger said. .
(Read the full article in the Journal here.)
Charlie Munger says the US should follow in China’s footsteps and ban cryptocurrencies
