Charlie Munger at the Berkshire Hathaway press conference, April 30, 2022.
Berkshire Hathaway Vice Chairman Charlie Munger has called on the US government to ban cryptocurrencies like China’s, saying the lack of regulation allows wretched excess and a gambling mentality.
“Cryptocurrency is not a currency, it is not a commodity, and it is not a security,” Munger, 99, said in an op-ed in The Wall Street Journal on Wednesday night.
“Instead, it’s a gaming treaty with almost 100% home advantage, entered into in a country where gaming treaties have traditionally only been regulated by states that compete at a disadvantage,” Munger said. “Obviously, the U.S. now needs to pass a new federal law to prevent this from happening.”
Munger, along with his business partner Warren Buffett, have long been skeptical of cryptocurrencies, arguing that they are not tangible or productive assets. Munger’s latest comments come as the crypto industry has been plagued by problems ranging from failed projects to a liquidity crisis, exacerbated by the collapse of FTX, once one of the world’s largest exchanges.
The cryptocurrency market lost over $2 trillion in value last year. The price of the world’s largest cryptocurrency, bitcoin, has fallen 65% in 2022 and is up nearly 40% to $23,824, according to Coin Metrics.
A well-known investor said that in recent years, private companies have issued thousands of new cryptocurrencies and they have become publicly traded without prior approval from any government disclosures. Some have been sold to promoters for next to nothing, with the public then buying at much higher prices, not fully realizing the “pre-dilution in favor of the promoter,” Munger said.
He listed two “interesting precedents” that could lead the US to take sound action. First, China has strictly banned trading offering services, order matching, token issuance, and virtual currency derivatives. Second, beginning in the early 1700s, the English Parliament banned all public trading in new common stock and maintained that ban for about 100 years, Munger said.
“What should the US do after cryptocurrency ban is approved? Well, one more action might make sense. thank the Chinese Communist leader for his great example of no-nonsense,” Munger said.
(Read the full article in the magazine here.)