What Elon Musk Said About Law That Threatens US cryptocurrencies

Charlie Taylor

This Saturday (7), an infrastructure project that is being seen as a great threat to the cryptocurrency industry is going to the vote in the United States Senate. The text suggests that all industry players – such as exchanges, developers, miners, custodians and DeFi projects – must respond to stricter tax reporting rules. The billionaire businessman Elon Musk was not quiet about the matter and on Friday night (6), he agreed with the Brian Armstrong's positioning, the CEO of the Coinbase exchange, in which he called the bill's stance on deciding which crypto industry innovations are allowed to thrive and which aren't as “disastrous”. Musk responded by Armstrong saying he agreed with his notes. “This is not the time to pick winners or losers in cryptocurrency technology. There is no crisis that requires hasty legislation." he wrote.

Miners at risk

The differentiation that the entrepreneurs refer to concerns an amendment to the bill that removes the obligation to declare user transactions only to miners of cryptocurrencies based on the proof of work (PoW) consensus, such as Bitcoin and Dogecoin — the Elon Musk's favorite cryptocurrency. The problem is that the text implies that other protocols such as proof of participation (PoS) — used by most DeFi projects and, from next year, will also be adopted by Ethereum — should pass information on network users to the US Internal Revenue Service, which would be “impossible” in the view of market experts. “Senator Mark Warner urges participation proof validators to do the impossible, but not labor proof miners. Why? It's not clear, but we can see ourselves with the Senate deciding which types of cryptocurrencies will survive government regulation,” points out Armstrong. He claims that by making the distinction between one currency and another explicit, the government chooses who the industry's winners and losers are. For example, he compares the case as if regulators suddenly decided that only iOS can work and banned the creation of Android apps. The businessman who founded the largest exchange in the United States, said that if the government fails to embrace the innovation arising in the crypto space, it can expect the development of blockchain technology to go abroad, towards competing countries like China.

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