Charlie Munger Calls for Ban on Cryptocurrencies

March 25, 2023
Mark Patrickson

Charlie Munger, billionaire vice chairman of Berkshire Hathaway, and right-hand man of Warren Buffet is calling for a ban on cryptocurrencies. In a recent op-ed for the Wall Street Journal, Munger called for US authorities to ban the digital commodities, saying they are like gambling contracts that target vulnerable investors.

Out of Touch or Speaking the Truth?

Munger's dislike of cryptocurrencies is based on several factors. First, he does not believe that they are securities, currencies, or commodities, and therefore should not be subject to the same regulations as traditional financial assets. Second, he argues that cryptocurrencies are a scam that preys on unsuspecting investors. He also claims that cryptocurrencies offer the house a nearly 100% edge and are only regulated by states that compete in laxity, making them a risky investment for the average person.

In the article, Munger calls on Congress to follow China's lead and ban cryptocurrency mining and trading. The People's Republic of China banned cryptocurrency mining and trading in 2021 due to concerns about the possible risks, although protectionism and an inability to control the movement of funds was likely the most significant factor.

Munger sees this as a necessary step to protect ordinary investors from the risks associated with cryptocurrencies. He argues that the US government should take a similar approach to protect its citizens.

Strong Views

Despite Munger's strong views on digital currencies, it is unlikely that the US government will ban them outright at this stage. The assets have become incredibly popular in recent years, with an increasing number of investors looking to invest in them. Also, many countries are now exploring the use of central bank cryptocurrencies and blockchain technology in various industries, which suggests that the trend towards digital assets is unlikely to reverse anytime soon.

Charlie Munger is not alone in his criticism of crypto. Warren Buffet, his long-time business partner, has also expressed doubts about the future of digital assets. In 2018 he famously referred to Bitcoin as "rat poison squared", arguing that cryptocurrencies have no intrinsic value and are not a productive asset. Other prominent investors, such as Ray Dalio and Mark Cuban, have also expressed similar views about the long-term potential of the industry.

Despite this scepticism of some investors, the crypto market has continued to grow in recent years. Bitcoin, the largest cryptocurrency by market capitalisation, saw its price surge to an all-time high in November 2021, driven by increased interest from institutional investors and companies. In addition, many other cryptocurrencies have emerged, offering investors a wider range of options for investing in digital assets.

Charlie Munger's negative views on cryptocurrencies are well-known and have been widely reported in the media for many years. But is he out of touch and not completely in tune with the modern world?

The younger generation certainly do not share Munger’s views, and our own gambling industry is also not in agreement. While we hoped that mainstream poker sites would use digital currency as a work around to end ring-fenced markets, what happened was many simply used them as a way to offer convenience, but we remain ever hopeful that their benefits could still play a role in bringing online poker back to a true worldwide player pool once again.

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