Governments may be able to slow down the advance of cryptocurrencies but they won’t be able to stop it, said Tesla CEO Elon Musk, whose market-moving tweets and crypto fandom are credited with causing massive optimism in digital asset markets.
“It is not possible to, I think, destroy crypto, but it is possible for governments to slow down its advancement,” Musk said at the Code Conference in Beverly Hills, California, CNBC reported.
Cryptocurrencies are coming under increasing scrutiny and regulation worldwide. For governments like China’s, which last week imposed a blanket ban on all things crypto not already banned, the decentralized nature of cryptocurrencies may be a challenge, Musk said.
“I suppose cryptocurrency is fundamentally aimed at reducing the power of a centralized government,” Musk said, adding, “They don’t like that.” He also suggested that the latest Chinese crackdown on crypto is probably linked to the country’s “significant electricity generation issues,” Cointelegraph reported.
China has in the past targeted crypto mining and crypto transactions at banks, but last week’s ban extends to crypto trading and overseas exchanges that provide services to mainland investors, erasing any doubt about authorities’ intentions.
At least 18 crypto exchanges were inaccessible in China or announced that they are leaving the market in a rush to cut ties with Chinese users after the communist government announced its latest crackdown.
Musk was asked by New York Times columnist Kara Swisher if he thought the U.S. government should regulate crypto.
“I would say, ‘Do nothing,’” he said.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
Tesla announced it had bought $1.5 billion worth of Bitcoin in February 2021, and said it would start accepting the cryptocurrency as payment. This helped spike the price of Bitcoin. The $1.5 billion investment grew to about $2.5 billion value in the second quarter, CNBC reported. The value of Bitcoin has since fallen, along with other cryptocurrencies.
Musk said he suspects part of China’s crypto crackdown may be due to electricity shortages in parts of China. “A lot of South China right now is having random power outages because the power demand is higher than expected … Crypto mining might be playing a role in that,” he said.
Musk has often tweeted support for digital coins such as Dogecoin (DOGE) and Shiba Inu (SHIB). When he did a U-turn and changed his mind about Tesla accepting Bitcoin as payments — he cited environmental concerns about Bitcoin mining in May 2021 — he was criticized in the crypto community.