Charlie Munger, the Berkshire Hathaway Vice Chairman, said in an opinion piece in the Wall Street Journal that the US should follow China's example and ban cryptocurrencies.
Munger, a well-known critic of cryptocurrencies, believed there was a gap in regulation in the U.S. that allowed cryptocurrencies to flourish.
A criptocurrency is not a currency, a commodity, and not a security. It is 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, according to Munger.
He said that the U.S. should act in the footsteps of China, which recently banned cryptocurrencies, and enact a new federal law to prevent this from happening.
In the second precedent, England reacted to a terrible depression that followed 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 99-year-old financial markets veteran pointed out the ban on public trading in new common stocks in the early 1700s in England as another example of successful regulation.
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.