(Kitco News) As the crypto market gets a boost from the latest rally in risk-on assets, Berkshire Hathaway Vice Chairman Charlie Munger says the U.S. should follow China’s actions and ban the crypto market.
“It isn’t currency. It’s a gambling contract with a nearly 100% edge for the house,” Munger wrote in an op-ed published in The Wall Street Journal Wednesday.
The gambling mentality is being encouraged by the lack of regulation in the sector, he said.
Munger noted that in recent years privately owned companies had issued thousands of new cryptocurrencies in the U.S., which became publicly tarded without any governmental pre-approval of disclosures.
“Such wretched excess has gone on because there is a gap in regulation,” he noted. “A cryptocurrency is not a currency, not a commodity, and not a security. 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. Obviously the U.S. should now enact a new federal law that prevents this from happening.”
Munger then pointed to China and England as examples to follow. In 2021, the People’s Bank of China (PBOC) banned all cryptocurrency transactions. “[China] wisely concluded that they would provide more harm than benefit,” Munger noted.
The second model was England banning all public trading in new common stocks for about 100 years in the early 1700s.
“England reacted to a horrible depression that followed the blow-up of a promotional plan to get vast profits by using slow-moving sailing ships to trade with very poor people halfway around the world,” Munger wrote. “And, in that 100 years, England made by far the biggest national contribution to the march of civilization as it led strongly in both the Enlightenment and the Industrial Revolution and, to boot, spawned off a promising little country called the United States.”
Munger concluded that after banning cryptocurrencies, the U.S. should “thank the Chinese communist leader for his splendid example of uncommon sense.”
Berkshire Hathaway’s Vice Chairman is known for his hard-line criticism of the crypto market.
At the time of the op-ed, the crypto space was seeing a rebound, with the overall market cap rising to $1.13 trillion, up 4.5% on the day. Bitcoin was trading near $24,000 and Ethereum near $1,700, with the whole space largely in the green.
This comes after massive losses in 2022 that saw the crypto market lose more than $2 trillion, which was made worse by the fall of the FTX exchange.
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