Ethereum (ETH) co-founder Vitalik Buterin has voiced strong criticism of the current US crypto regulation framework. He argues that it unfairly targets cryptocurrencies as securities while allowing “useless things” with “vague potentials” to operate unchecked.
Vitalik Buterin Slams US Crypto Regulation Model
Buterin’s remarks came as a response to questions about regulation in the broader crypto industry on the Ethereum network that were posed to him. The probe also borders on whether more is needed to reduce the number of opportunists, thus making the industry safer.
According to Vitalik Buterin, the primary issue with crypto regulation in the United States is that the system favors assets with unclear promises of potential returns over those with transparent and well-defined financial expectations.
Notably, he asserts that if a project presents vague potential returns without concrete plans, it often escapes regulatory scrutiny. However, projects that offer clear explanations of expected returns and customer rights are more likely to be classified as securities and face stricter regulation.
Buterin described this regulatory inconsistency as “anarcho-tyranny.” He suggested that it creates an incentive structure that is unfavorable to the crypto space, rather than either complete anarchy or strict tyranny. He maintains that this framework prevents innovation and transparency within the industry.
The Ethereum co-founder expressed his desire for a shift in regulatory approach that would encourage transparency and long-term value in issuing tokens. He advocates for a system where issuing tokens without a clear, long-term plan for maintaining or increasing their economic value is considered riskier than providing such a plan.
A Call for Regulatory Reform
As per his argument, to effect such a change requires genuine cooperation and good-faith engagement between regulators and the crypto industry.
Buterin stated, “I would much rather see us move to the opposite situation, where issuing a token _without_ giving a clear long-term story for why it will maintain or increase in economic value is the riskier thing, and if you _do_ give such a long-term story and follow basic best practices then you’re safe.”
Analysts in the crypto space agree that Buterin’s comments highlight the need for a more balanced regulatory approach. This move might reward transparency and long-term planning in the cryptocurrency ecosystem and the regulatory authority should do more to encourage innovation.
The approval of spot Ethereum ETF is a good place to start. The U-Turn from the SEC means the bar is shifting in favor of crypto, a trend that is setting a precedence for other assets.
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