According to the 99-year-old billionaire investor, cryptocurrencies are mere “gambling contracts.”
Charlie Munger, American billionaire investor and Vice Chairman of Berkshire Hathaway, has called on the United States government to place an outright ban on cryptocurrencies just like China. Munger’s suggestion comes on the heels of the FTX blowout which has exposed the need for stronger regulatory oversight.
Munger recently shared his unique views in an op-ed article that was published in the American daily newspaper Wall Street Journal yesterday, and further highlighted by CNBC today.
According to him, cryptocurrencies cannot be regarded as commodities, securities, or even currencies. This is in direct contrast to classifications from financial watchdogs such as the SEC which has called BTC a commodity and branded several other crypto assets as securities.
However, to Munger, all crypto assets are gambling contracts that are not being properly regulated. “It (crypto) is 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 remarked.
He further called on the U.S. government to set up a new federal law that will prevent the growing industry of cryptocurrency from further stretching into the U.S. Munger believes the industry has eaten deep into the country, bringing a “gambling mentality” with it due to the absence of proper regulatory efforts.
Munger remains one of the most vocal cryptocurrency critics, as he and his business partner Warren Buffett have repeatedly condemned the industry at every opportunity. Two years back, Munger lauded China’s efforts at clamping down on cryptocurrencies. In February 2020, Buffett claimed that cryptocurrencies have no value and do not produce anything.
The Need for Regulatory Clarity
Charlie Munger’s latest calls for a crypto ban are in sync with comments from Sherrod Brown, U.S. Banking Committee chair. Last December, Brown had asked the SEC and CFTC to consider an outright ban on cryptocurrencies in the wake of the FTX fiasco.
Brown’s remarks came up amid an increased need to provide regulatory clarity in the crypto industry following the debacles that rocked the scene last year. If the U.S. considers a ban on cryptocurrencies, it would be following in the footsteps of countries such as Algeria, China, Egypt, and others that have put some sort of restrictions on the use of digital assets.
However, industry players have called for regulatory clarity instead so as to protect consumers. Some pundits also believe an outright ban is unlikely. Jerome Powell, Chairman of the Federal Reserve, disclosed in September 2021 that the central bank has no plans to ban cryptocurrencies.