Co-Founder of Ethereum Criticizes US Crypto Regulations for Encouraging
Ethereum co-founder Vitalik Buterin sparked controversy this week with his strong criticism of US crypto regulations, calling for a significant overhaul of the system. Buterin condemned the Securities and Exchange Commission (SEC) for its broad definition of securities, which he believes hampers innovation and promotes empty promises over genuine progress.
Ethereum Co-Founder: Overly Broad Definitions Stifle Progress
Buterin’s main issue lies in how the SEC categorizes many crypto projects as securities, limiting true innovation. He argues that the current environment discourages real value and innovation within the cryptocurrency space, as stated by the Ethereum co-founder.
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Vitalik criticized the U.S. definition and regulation of cryptocurrency as securities, saying that the existing system encourages useless things and vague potential returns. If promised returns and rights are securities, he hopes to see a shift to the opposite situation, issuing…
— Wu Blockchain (@WuBlockchain) June 30, 2024
He argues that the SEC’s approach favors speculative ventures over projects with tangible economic benefits. According to Buterin, the rise of projects making vague promises rather than contributing real value to the digital industry is a concerning trend.
“The incentive gradient that this “anarcho-tyranny” creates ends up worse for the space than either plain anarchy or plain tyranny.”
From Hype To Utility: Redefining Securities For A New Era
Buterin suggests a fundamental change in how the SEC approaches crypto regulation. His proposal revolves around a revised classification of securities in the digital asset realm.
Ethereum is currently trading at $3,462. Chart: TradingView
Rather than solely focusing on potential returns, Buterin suggests evaluating whether tokens are backed by economic activity. This shift, he believes, would encourage the creation of tokens with real-world utility, distinguishing genuine projects from speculative ventures driven by hype.
Building A Future Where Innovation And Regulation Coexist
Buterin advocates for a collaborative approach between regulators and the crypto industry to move forward. He envisions a future where regulators can prevent fraud while creating an environment conducive to innovation.
Amidst increased global scrutiny of the crypto market, Buterin’s call for reform highlights the importance of finding a balance that safeguards investors and fosters the growth of the cryptocurrency industry.
His intervention underscores the need for regulators to respond to his suggestions, signaling potential changes in the regulatory landscape. Featured image from Built In, chart from TradingView
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