Charlie Munger Thinks Cryptocurrency Should Be Banned In The U.S.

Munger argues that in cryptocurrency markets like China, where there is no regulation, a gambling mentality manifests itself and wretched excesses result.

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In an op-ed piece that was published on Wednesday in the Wall Street Journal, Munger stated that cryptocurrencies are not currency, commodities, or securities.

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There is no doubt that American citizens should now consider passing a federal law to prevent this from happening, since the contract is a gambling contract that has more than a 100% house edge, and that has traditionally been regulated only by the states that compete in laxity in this area.

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In addition to his business partner Warren Buffett, Munger has been a long-time skeptic of cryptocurrencies, arguing that they are neither tangible nor productive assets. FTX, once one of the world's largest exchanges, fell last month, exacerbated by the failure of failed projects. Munger's latest comments came as problems plagued the crypto industry, including failed projects and liquidity crunches.

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As a result of the crypto market collapse last year, more than $2 trillion was lost in the market. Cryptocurrency bitcoin, which is the largest currency in the world, plummeted by 65% in 2022, but has since recovered by about 40%, trading at about $23,824.

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Since the beginning of the year, thousands of cryptocurrencies have been issued by privately held companies, and many have become publicly traded without governmental approval. According to Munger, some of the shares have been sold to promoters for almost nothing, before the public buys them at higher prices without fully understanding the "pre-dilution in favor of the promoter.

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The U.S. may be guided into sound action by two "interesting precedents.". In the first instance, China has strictly prohibited the sale of virtual currency derivatives, as well as trading and order matching services. Additionally, Munger said that the English Parliament banned all public trading in new common stocks from the early 1700s until the early 1900s.

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“When cryptocurrencies are banned in the United States, what should be done? I suggest thanking the Chinese communist leader for his extraordinary example of common sense,” Munger said.