What should governments do with cryptocurrencies? Nothing! That’s what Elon Musk said during an interview at the Code Conference in Beverly Hills, California.
Elon Musk: China doesn’t like cryptocurrencies
Elon Musk’s interview with Kara Swisher began with the subject of cryptocurrencies.
For the CEO of Tesla, cryptocurrency is his safe word.
It was inevitable to talk about the authoritarian turn in China, where all crypto activities have been banned. Musk commented by saying that it is clear that China does not like cryptocurrencies.
His reasoning is as follows:
“Cryptocurrency is fundamentally aimed at reducing the power of the Chinese government, and they don’t like that”.
Another hypothesis that Tesla’s CEO sees as justifying China’s attitude towards cryptocurrencies is the energy resources they consume.
“The government cannot destroy cryptocurrencies”
Despite increasingly stringent bans in China and growing attention in the US, the CEO of Tesla says governments can do nothing against cryptocurrencies: it is impossible to destroy them.
At the Code Conference, Elon Musk stated on the subject:
“It’s impossible to destroy crypto”.
However, governments have the power to slow down their development, he stressed.
So what should governments do with cryptocurrencies? Nothing, this was his thinking:
“I would say they should do nothing”.
Elon Musk closed his part of the interview dedicated to cryptocurrencies by saying that he does not think he is an expert, nor that cryptocurrencies are the new messiah, despite their potential.
Brian Armstrong’s reply
The CEO of Coinbase, Brian Armstrong, responded to Elon Musk’s words on regulation. His point of view is different: there is a need for regulatory intervention that is sensitive and reasonable towards the sector.
The other option is sensible/thoughtful regulation, hopefully we help propose some solutions here https://t.co/kfw59KNdoo
— Brian Armstrong (@brian_armstrong) September 29, 2021
Not surprisingly, Coinbase intends to become an advisor to the US government and is developing a draft regulatory framework.
Why there is a need for regulation
In recent weeks, Coinbase’s CEO has clashed with the SEC, which has put the brakes on the launch of Coinbase Lend, the exchange’s new service that would have allowed users to earn interest by lending cryptocurrencies. What Coinbase is complaining about is that despite the willingness to cooperate shown by the largest exchange in the United States, the SEC has been so grumpy that they have never given an explanation as to why they are against the launch of Lend.
The only thing they have been able to say is that if Coinbase will launch the service, the SEC will take legal action.
Ripple, on the other hand, has already been involved in a legal battle with the SEC since December. The US regulator alleges that Brad Garlinghouse and Ripple’s management sold XRP as security without the proper licences. The issue here is the nature of the token, whether it is equal to Bitcoin or Ethereum or whether it is instead a security and should be treated as such. At the moment, there is no possibility of an understanding between the parties.
Perhaps if the legislative framework had been clearer, both episodes would never have happened. But crypto is a young and evolving sector. It will probably still have a long way to go before it can arrive at a clear definition, also from the point of view of the rules governing it.