Why is there no encryption in the Beautiful Bill? Why did Musk strongly criticize it?

Deng Tong, Golden Finance

On Tuesday, after more than 24 hours of debate, Vice President JD Vance cast the decisive vote and Trump's "Beautiful Big Bill" was passed. The bill has sparked debate within the Republican Party, which controls both houses of Congress, about deficits, social programs and spending levels. Trump celebrated the passage of the bill during a visit to an immigrant detention center in Florida: "This is a great bill that everyone can benefit from." But Musk opposed the bill from the beginning and said: "If the bill passes, a new American political party will be established the next day."

What key information does the "Beautiful Big Bill" involve? Why is there no cryptocurrency-related content? What cryptocurrency tax provisions may be added later? Why did Musk strongly criticize the bill? What do industry insiders think of the bill? How did the financial market react?

I. The content of the "Beautiful Big Bill"

Social Security Tax

During the campaign, Trump proposed to abolish the Social Security income tax - a monthly payment to Americans of retirement age and people with disabilities.

The House bill falls short of that promise, but it does temporarily increase the standard deduction to a maximum of $4,000 for people 65 and older. The deduction would take effect from 2025 to 2028.

Senate Republicans approved extending the Social Security tax break and adding a provision to give seniors making up to $75,000 a year a $6,000 tax break.

More Medicaid requirements

To fund tax cuts elsewhere, Republicans added additional restrictions and requirements to Medicaid, the health care program that millions of disabled and low-income Americans rely on.

Medicaid is one of the largest components of federal spending, and changes to it have been a major source of political conflict.

One of the changes is a new work requirement for childless adults who are not disabled. To qualify, they would have to work at least 80 hours a month starting in December 2026, the bill states.

Another proposed change to the program would require re-enrollment in Medicaid every six months instead of annually. Enrollees would also have to provide additional proof of income and residency.

The Senate proposal imposes more restrictions on Medicaid, which could create more headaches for Republicans in the House.

The Senate version proposes reducing the provider tax, which states use to pay for their Medicaid costs, from 6% to 3.5% by 2032.

Some Republicans have complained that their states rely on those taxes for funding, especially for rural hospitals, which led the Senate to delay the cuts and add $50 billion to the rural hospital fund.

The Senate bill also proposes tightening eligibility requirements, requiring able-bodied adults with children 15 and older to work or volunteer at least 80 hours a month.

The Medicaid work requirements proposed by the Senate are said to be the most stringent yet proposed by Republicans, raising the possibility that large numbers of Americans will lose their health insurance because they can't complete the new paperwork on time.

Increases deduction for state and local taxes

The bill increases the deduction limit for state and local taxes.

Currently, taxpayers are limited to $10,000 in deductions against their federal taxes. That cap expires this year.

The bill approved by the Senate would increase the deduction from $10,000 to $40,000, but would return to $10,000 in five years.

Local taxes have been a sticking point in the House, especially among Republican diehards in some Democratic-held urban areas. The House version of the spending bill does not set a five-year cap on deductions, so the Senate changes could cause trouble for some House Republicans.

Food benefits

The Supplemental Nutrition Assistance Program, or Snap, used by more than 40 million low-income Americans, also gets reforms.

The Senate bill would require states to increase their contributions to the program, which is currently fully funded by the federal government.

The government would continue to fully fund states with error payment rates below 6%, but states with higher error payment rates would cover 5% to 15% of the program's costs.

The reforms would begin in 2028.

The Senate bill also adds work requirements for able-bodied Snap enrollees without dependents.

Tax exemption for overtime, tips and other expenses

The "tip tax exemption" provision in the budget bill would mark the fulfillment of a promise made during Trump's campaign.

The Senate bill, which is being considered by the House, would allow individuals to deduct a certain amount of tips and overtime pay from their taxes. However, they propose phasing out those benefits, starting at $150,000 a year for individuals and $300,000 for joint filers.

The policy would expire in 2028.

The Senate legislation would also permanently increase the child tax credit to $2,200 — $300 less than House lawmakers had expected. The House version would require both parents to have a Social Security number, but the Senate approved a requirement that only one parent is needed.

The Senate bill also proposes raising the debt ceiling by $5 trillion — up from the $4 trillion the House approved last month. The debt ceiling is the limit on the amount of money the U.S. government can borrow to pay its bills.

Raising the debt ceiling allows the government to pay for programs Congress has already approved.

Clean Energy Tax Cuts

One of the most notable disagreements between House and Senate Republicans is over the Senate's proposal for clean energy tax breaks.

While both parties have called for an end to the Biden-era federal clean energy tax credits, Senate Republicans approved phasing out those credits at a slower pace.

For example, the Senate extended the period for companies building wind and solar farms to continue to receive tax credits. However, both the House and Senate versions seek to deny tax credits to companies whose supply chains may have ties to "foreign entities of concern," such as China.

Companies that start construction this year could qualify for the full tax credit. That drops to 60% if construction begins in 2026 and 20% if construction begins in 2027. The tax credit would be eliminated in 2028.

The House version of the bill seeks to end the tax breaks for these companies almost immediately.

Second, why is there no cryptocurrency-related content in this version of the bill? What cryptocurrency tax provisions may be added later?

In the final hours of debate, pro-cryptocurrency senators and industry policy leaders competed to add an amendment to the bill that contained many long-sought tax benefits - benefiting cryptocurrency stakers and miners, businesses holding cryptocurrency inventory, and retail digital asset users.

During the debate on the bill, Wyoming Senator Cynthia Lummis said she would add a provision to address what she called "unfair tax treatment" for cryptocurrency miners and stakers. However, her proposed changes to the bill did not appear in the amendments submitted to the Senate for consideration on Monday or Tuesday, and the bill was ultimately passed without mentioning cryptocurrency taxation.

Some industry insiders pointed out that this result is a "missed opportunity" for the cryptocurrency industry. "We just don't have enough time."

But a spokesman for Senator Loomis is optimistic about the prospects for crypto taxation, pointing out that the issues involved in the cryptocurrency amendment have now attracted the attention of senior Republicans, including Senate Finance Committee Chairman Mike Crapo (R-Idaho). "In the past few weeks, Senator Loomis has had fruitful conversations with Chairman Crapo and other members of the Senate Finance Committee, and looks forward to continuing to work with other members of the committee to resolve these important tax issues in the future."

It is not clear what content of Loomis's crypto tax provisions will eventually be included in the amendment to the "Big and Beautiful Bill." Crypto policy experts have speculated that the bill could include a measure that would clarify that cryptocurrency rewards earned from staking and mining should be taxed only after they are sold, rather than when they are generated.

Another measure that could be included in the amendment is known as a “mark-to-market accounting provision,” which would allow companies more flexibility to report unrealized cryptocurrency gains as a way to boost their balance sheets.

A third measure — and perhaps the most popular among retail cryptocurrency investors — would provide a minimal tax exemption for cryptocurrency transactions below a certain threshold. This tax exemption will allow Americans to not have to declare cryptocurrency transactions worth less than a few hundred dollars as capital gains tax, and many in the industry believe that this is a path to more widespread adoption of cryptocurrency as an everyday payment method.

3. Why did Musk strongly criticize the bill?

Musk once criticized the Senate for passing Trump's "Beautiful Big Bill" on the X platform: "The Senate's latest draft bill will destroy millions of American jobs and cause great strategic damage to the United States. It is extremely crazy and destructive. It gives handouts to past industries but severely damages future industries."

In response to Musk's attitude, Trump responded: The Department of Government Efficiency (DOGE) will pay attention to Musk, and is not worried about Musk's criticism of the tax bill ("Beautiful Big Bill"). If the Department of Government Efficiency (DOGE) pays attention to Musk, we will save a lot of wealth. When asked whether he would expel Musk, Trump said he would "consider it" and said he might let the "Government Efficiency Department", a "monster that may bite its master back", deal with Musk, and reiterated that Musk "has received a lot of government subsidies".

Trump posted on his "Truth Social" platform: "Musk may have received more subsidies than anyone in history, and without subsidies, Musk would probably have to close down and return to his hometown in South Africa. Rocket launches, satellite production and electric vehicles are all stopped, and our country can save a lot of money." According to an analysis by The Washington Post in February, Musk and his company have received at least $38 billion in government contracts, loans, subsidies and tax credits over the years.

It is reported that The bill will increase the federal debt by more than $3 trillion and increase the U.S. borrowing authority by $5 trillion. Therefore, Musk's focus on opposing the bill is still on "huge spending", believing that the bill undermines his work to cut government spending. Musk said: "Every member of Congress who called for cuts in government spending during the campaign and then immediately voted for the largest debt increase in history should be ashamed!" Musk wants to make sure these members lose in next year's primary elections.

At present, Republicans are already worried that the dispute between Musk and Trump may damage their chances of retaining a majority in the 2026 mid-term congressional elections. A former Trump campaign official said: "Musk is unique in that he has enough money and is likely to really affect the two-party system."

4. Reactions from industry insiders and financial markets

Loomis said: The bill "is not perfect", but it is "an important step in the right direction."

Massachusetts Senator Elizabeth Warren said on Monday: "Trump and congressional Republicans plan to write Meta a $15 billion check just to keep Meta running - the money is paid by cutting health insurance for millions of Americans. They care more about helping billionaire companies than helping you."

After the U.S. Senate passed Trump's trillion-dollar tax bill, investors worried about the U.S. fiscal situation. Bitcoin fell to around $106,000 at one point, and had recovered to $107,100 as of press time. Gold remains higher - gold prices remained around $3,340 an ounce, up 2% in the previous two trading days. The passage of the bill could benefit gold's appeal as a safe haven, as investors are already reconsidering their allocation to U.S. assets due to concerns about Trump's destructive trade and economic agenda. The continued weakness of the dollar - currently at its lowest level since 2022 - continued to support gold prices, offsetting pressure from rising U.S. Treasury yields after a report on Tuesday showed an increase in U.S. job openings.