Charlie Munger Criticizes Crypto After Berkshire Hathaway Sinks $1 Billion Into Crypto-Friendly Bank

As one of the biggest public companies in the world, Berkshire Hathaway commands respect whenever the company makes a move. And because billionaire investor Warren Buffett owns the company, it is always under the microscope.

Charlie Munger Criticizes Crypto After Berkshire Hathaway Sinks $1 Billion Into Crypto-Friendly Bank

But right now, it's Buffett's right-hand man Charlie Munger who is hogging the headlines.

Strong Comparisons from Munger

Earlier in February, Munger - the vice chairman of Berkshire Hathaway - shared his candid thoughts about cryptocurrencies. Speaking at a shareholder's Q&A session at the annual meeting for the Daily Journal Corporation, Munger likened crypto to a "venereal disease," explaining that the entire industry needs to be shut down.

Munger said he has never owned any cryptocurrencies and is proud of his stance. The 98-year-old billionaire commended the Chinese for banning crypto and saying the West should never have given crypto free room to operate in the first place.

"If you stop to think about it, it's an ideal currency if you want to commit extortion, or kidnapping, or have a protection racket or something. Why should a civilized government want an ideal untraceable technology to come into the payment system run by a bunch of people who want to get rich quick for doing very little for civilization. Of course, I hate it."

Not Something New

Munger's statement echoes the sentiment of Buffett himself. A notable crypto detractor, Buffett has never been shy to say what he feels about digital assets and their place in the financial system.

In 2020, Buffett explained that he never wanted to own any cryptocurrency. The billionaire investor claimed you can't do anything with crypto except sell it to someone else, adding that many have used these assets to move money around illegally.

Of course, Buffett's arguments appear to be on mute. Crypto has grown significantly over the years. Digital assets are gaining more use than just speculation and transactions, and illegal crypto transactions have reduced. If anyone has concerns about crypto's illegal dealings, similar problems exist around traditional cash.

Regardless, Buffett has never backed down. The billionaire has called Bitcoin "rat poison squared" and remains resolute in his decision never to own cryptocurrency.

Even Critics See the Value of Crypto

Despite being anti-crypto, Munger and Buffett still have skin in the industry. In mid-February, Berkshire revealed in a filing with the Securities and Exchange Commission (SEC) that it had purchased $1 billion worth of Nubank Class A stock in the final quarter of 2021.

This isn't the first investment in Nubank. Berkshire first threw a whopping $500 million into the Brazilian digital bank in July 2021. Nubank went public in December, netting Berkshire a tidy $150 million profit on its initial investment. Showing continued belief in Nubank, Berkshire has now doubled down on its investment.

The new filing also showed that Berkshire had sold off $1.8 billion worth of VISA stock and $1.3 billion worth of Mastercard stock. This reveals a strategy of moving off traditional payment solutions and embracing their FinTech, crypto-loving rivals.

In September 2020, Nubank acquitted Easynvest - a trading platform that has since been offering access to a Bitcoin exchange-traded fund (ETF). Named QBTC11, the ETF has backing from QR Asset Management and is listed on Brazil's B3 stock exchange. It would seem that Nubank has some deep links to crypto. Buffett, who calls crypto "rat poison squared," is now the company's lifeline.

Crypto investment products remain highly popular on the market. Data from Bloomberg showed that these investment products have jumped from 35 top 80 in 2021, with the total asset valuations hitting $63 billion - up by over 100 percent from the $24 billion level that they were heading into last year.

All in all, Buffett and Munger appear to be fine with crypto as long as it makes them money. Though they share negative views towards the market, it is interesting that they still choose to associate with it - albeit indirectly.


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