Why the U.S. should ban cryptocurrency

In recent years, privately owned companies in the U.S. have issued thousands of new cryptocurrencies, large and small. These have become publicly traded without any government approval of disclosures.

A big block of cryptocurrencies has been sold to a promoter for almost nothing, after which the public buys in at higher prices without understanding the pre-dilution in favor of the promoter.

All this wild and wooly capitalism is much like that described by Mark Twain, who was thought to have said that a mine has a hole in the ground with a liar on top. The excess has gone on because there is a gap in regulation. A criptocurrency is not a currency, a commodity, and not a security. It's a gambling contract with a nearly 100% edge for the house, entered into a country where gambling contracts are traditionally regulated only by states that compete in laxity. The U.S. should enact a new federal law that prevents this from happening.

Two interesting precedents could lead to sound action. In the first precedent, the communist government of China recently banned cryptocurrencies because it concluded that they would cause more harm than benefit. In the second precedent, England reacted to a terrible depression in the early 1700s following the blow up of a promotional plan to get huge profits by using slow-moving sailing ships to trade with very poor people halfway around the world.

The English Parliament did what it did when this crazy promotion blew up, it was direct and simple: it banned all public trading in new common stocks and kept this ban in place for about 100 years. In that 100 years, England made the biggest national contribution to the march of civilization as it led strongly in both the Industrial Revolution and the Enlightenment and to boot spawned a promising little country called the United States.

What should the U.S. do after a ban on cryptocurrencies is in place? One more action might make sense: thank the Chinese communist leader for his splendid example of uncommon sense.