According To Charlie Munger, The United States Should Ban Cryptocurrencies In The Same Way That China Has Done
Charlie Munger of Berkshire Hathaway refers to cryptocurrency as “gambling”
Charlie Munger, vice chairman of Berkshire Hathaway (BRK) and an outspoken opponent of bitcoin, called for the United States to follow China and ban cryptocurrencies in an opinion piece published in the Wall Street Journal.
Privately held businesses in the U.S. have recently released thousands of new cryptocurrencies, big and small. Later, these were traded publicly without prior approval from the government.
Charlie Munger, vice chairman of Berkshire Hathaway, urged the United States government to ban cryptocurrencies, as China has done. He claimed that a lack of regulation allowed for wretched excess and a gambling mentality.
In an opinion piece in The Wall Street Journal on Thursday, 99-year-old Munger argued that cryptocurrencies are neither money, commodity, nor security.
As opposed to that, Munger said, “it’s a gambling contract with a nearly 100% edge for the house, entered into in a nation where gambling contracts are traditionally only regulated by states that compete in laxness.” The United States needs to pass a new federal law to stop this from happening.
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Longtime opponents of cryptocurrencies, Munger and his business partner Warren Buffett maintain that cryptocurrencies are neither real assets nor productive ones. Munger’s most recent remarks came at a time when the cryptocurrency industry was struggling with issues like failed projects and a lack of liquidity, which were made worse by the collapse of FTX, once one of the biggest exchanges in the world.
Over $2 trillion was lost from the cryptocurrency market’s value in 2017. According to Coin Metrics, the price of bitcoin, the biggest cryptocurrency in the world, fell 65% in 2022 before rising about 40% to trade at about $23,824.
The renowned investor claimed that thousands of new cryptocurrencies were recently released by privately held companies and listed on exchanges without prior approval from the government. Some have been given away to promoters for practically nothing, Munger claimed. Then the general public invests at much higher prices without fully realizing the “pre-dilution in favor of the promoter.”
He listed two “interesting precedents” that might help the United States take wise decisions. First, trading, order matching, token issuance, and derivatives for virtual currencies are strictly forbidden in China. Second, Munger noted that the English Parliament outlawed all public trading in newly issued common stocks beginning in the early 1700s and maintained this attempt to ban for roughly 100 years.
“What should the United States do now that a cryptocurrency ban is in effect? Another course of action would be to express gratitude to the Chinese communist leader for his impressive display of extrasensory perception, Munger said.
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