Cannot abstract over erased classes

Compiler version

3.0.1

Minimized example

import language.experimental.erasedDefinitions

erased class Capability

def f(using Capability): Int = 1
def g[C <: Capability](using C): Int = 1

Output

6 |def g[C <: Capability](using C): Int = 1
  |                             ^
  |illegal reference to erased trait Capability in definition that is not itself erased

Expectation

We should be able to abstract over erased classes.

[arturopala]

Does it work with (using erased C)?

[odersky]

If the type of a val definition or parameter is a (possibly aliased, refined, or instantiated) erased class, the definition is assumed to be erased itself.

So that does not cover the example, since there C is neither aliased, nor refined nor instantiated. Should it also work? I am not sure about that yet. Maybe better be conservative at first?

If we wanted to generalize it, what would the right rule be? In particular considering that bounds can be unions or intersections?