On Friday, celebrity investor Kevin O’Leary revealed that about one-fifth of his investment holdings are either in companies that are operating in the crypto industry, or are in cryptocurrencies themselves. In a ‘Squawk Box’ interview, the investor said that he had millions of dollars and had chosen to invest 20% of this overall portfolio in blockchain and crypto. Blockchain is the underlying technology that powers cryptocurrencies and is known to have a lot of potential. In recent years, there has been a lot of attention directed towards cryptocurrencies and they have also attracted significant investment. This includes some high-profile figures like Bill Miller and Paul Tudor Jones.
Even institutions have also delved into this space. As a matter of fact, there are plenty of people who are touting Bitcoin, which is the world’s largest cryptocurrency, as a store of value. There are some smaller digital tokens that have also gained a lot of popularity. According to crypto enthusiasts, the industry is still in its early stages, after all Bitcoin was only introduced in 2009. Nevertheless, it is also a fact that many of the crypto startups have now begun to attract venture capital worth billions of dollars.
But, it is important to note that this burgeoning asset class is still quite volatile and its ‘highly speculative’ nature has drawn criticism from plenty of regulators. Moreover, its lack of investor protection has also been a concern of regulators, such as the US Securities and Exchange Commission (SEC). Its chairman, Gary Gensler has also warned of the same as has the outgoing chair of the financial regulatory authority of the United Kingdom. He has talked about the pump-and-dump schemes associated with a number of digital tokens. Charlie Munger, a billionaire businessman, is also one of the detractors of cryptocurrencies.
He is the vice chair of Berkshire Hathaway and partner of Warren Buffett and has been very vocal in his criticism of digital currencies and their volatile nature. Back in February, he went as far as saying that he wished the US had banned cryptocurrencies completely. Warren Buffett is also not a fan of crypto either and has actually used the term ‘rat poison squared’ for referring to bitcoin. There are also those who believe that Bitcoin is just another Ponzi scheme. Andrew Ross Sorkin of CNBC asked O’Leary about the possibility of some cryptocurrencies not being around after a decade.
O’Leary acknowledged that this was a risk and that he had taken it into consideration. He said that diversification was important and he had chosen 32 different positions, which includes equity FTX. The crypto exchange was founded by Sam Bankman-Fried and O’Leary has disclosed that he is a paid spokesperson. He stated that they had no idea which crypto would win at the end of the day, whether it would be Ethereum, Solana, Avalnche or Helium. He added that he owned them all. His comments came after President Joe Biden had signed an executive order for the government to assess the crypto industry.