Vitalik Buterin, the co-founder of Ethereum (ETH), has said that he doesn’t like how the US regulates cryptocurrencies. Buterin recently spoke out against the current regulatory framework on Warpcast, saying that it encourages creating projects that make vague claims of returns that don’t deliver.
However, Buterin said that if crypto returns and rights are considered securities, the focus should move to making tokens that keep or gain value. He stressed that regulators and the crypto business need to work together honestly for this change to happen.
On June 28, Jason, a member of the Ethereum Foundation, made a post on Warpcast that referenced a tweet Buterin had made in 2022 during the debate on Sam Bankman-Fried’s suggested frontend regulation.
This started the conversation. Buterin mentioned many rules for decentralized finance (DeFi) platforms in that tweet to cut down on scammers and make things safer. These ideas included limiting leverage, being clear about audits or other security checks on contract codes, and limiting usage through knowledge-based tests instead of minimum net worth rules.
Vitalik Buterin Criticizes US Crypto Regulation And Suggests Improvements
Jason said again that he thought Buterin’s proposed rules were good, and he asked Ethereum’s co-founder to share his thoughts. He also suggested a pop-up that shows how a coin’s tokenomics are broken down right now, before a swap, and includes links to Etherscan that show how the top holders got their coins.
When Buterin replied to Jason on June 29, he brought up the main problem with how crypto is regulated in the U.S. He said that projects that make vague claims can run without any problems, but projects that give clear information about returns and rights are usually seen as securities and have to follow stricter rules. He said that what was happening was “anarcho-tyranny” and was bad for the crypto area.
Buterin said he wanted rules in place that would make it riskier to issue a token without a clear long-term value offer. He thought crypto tokens would be safe if the long-term picture was clear and best practices were followed. He said this could only be done if regulators and the business worked together.
The main challenge with crypto regulation (esp in the U.S.) has always been this phenomenon where if you do something useless, or something where you’re asking people to give you money in exchange for vague references to potential returns at best, you are free and clear, but if you try to give your customers a clear story of where returns come from, and promises about what rights they have, then you’re screwed because you’re “a security
Vitalik Buterin, Ethereum co-founder
A U.S. judge threw out the U.S. stocks and Exchange Commission’s (SEC) claim on June 28 that secondary sales of Binance’s BNB token are stocks. This is when Buterin spoke out. The SEC vs. Ripple case affected this decision because it showed how the Howey Test should be used to look at trades from an economic point of view.
A big win for crypto traders was the judge’s decision that secondary sales of Binance Coin do not count as stocks. This choice could have bigger effects on how regulations work and change how cryptocurrencies are categorized.
