In a recent interview, Berkshire Hathaway Vice Chairman Charlie Munger urged the U.S. government to ban cryptocurrencies, in line with China’s decision, noting that the lack of regulation has enabled wretched excess and a gambling mentality to flourish the cryptocurrency industry. “A cryptocurrency is not a currency, not a commodity, and not a security,” the 99-year-old Munger said in an op-ed published in The Wall Street Journal Thursday. “Instead, it’s a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity,” Munger said. “Obviously the U.S. should now enact a new federal law that prevents this from happening.”
Munger and Warren Buffett have long been skeptics of cryptocurrencies, asserting that they are neither tangible nor productive. Munger’s latest comments came as the crypto industry was plagued with problems from failed projects to a liquidity crunch, exacerbated by the fall of FTX, once one of the world’s largest exchanges. The cryptocurrency market lost more than $2 trillion in value last year. The price of bitcoin, the world’s largest cryptocurrency, plunged 65% in 2022, and it has rebounded about 40% to trade around $23,824, according to Coin Metrics. According to the renowned investor, thousands of new cryptocurrencies have been issued by privately held companies in recent years. These cryptocurrencies have become publicly traded without any approval from the government. Some have been sold to a promoter for almost nothing, after which the public buys in at much higher prices without fully understanding the “pre-dilution in favor of the promoter,” Munger said.