Ethereum Vitalik Buterin Calls For More Crypto Regulation

Ethereum founder Vitalik Buterin has shared his views about the raging conversation surrounding crypto regulations in a recent Twitter thread.

Vitalik Buterin discussed how regulations would impact crypto. Ethereum’s founder showed support for any law that makes it easier for the industry to reach mainstream adoption. But he categorized those that intrude on how blockchain technology works as bad.

This statement continues with his earlier views, where Buterin emphasized the importance of adoption and why it is necessary to remove all barriers that could prevent the crypto market to flourish.

Ethereum Founder Vitalik Buterin on DeFi KYC

Buterin also touched on the idea of KYC for DeFi frontends as proposed by FTX founder Sam Bankman-Fried.

Ethereum’s founder said that such an initiative is pointless because it would only annoy the users. Meanwhile, crypto hackers will still be able to write codes that interact directly with smart contracts.

The “KYC on defi frontends” idea does not seem very pointful to me: it would annoy users but do nothing against hackers. Hackers write custom code to interact with contracts already. Exchanges are clearly a much more sensible place to do the KYC, and that’s happening already.

— vitalik.eth (@VitalikButerin) October 30, 2022

In Vitalik Buterin’s view, all regulations focus on achieving two goals, consumer protection and making it difficult for criminals and bad actors to move large amounts of money around. 

When it comes to bad actors moving money around, Ethereum founder Vitalik Buterin said these issues are not “concentrated not in DeFi, but in large-scale crypto payments in general.”

Still, he recommended regulations to the DeFi front ends. These included a limit on leverage, requiring transparency on audits and security checks for contract codes, and limiting usage by knowledge-based tests instead of net worth.

Buterin said:

“I would love to see rules written in such a way that requirements can be satisfied by zero-knowledge proofs as much as possible. ZKPs offer lots of new opportunities to satisfy reg policy goals and preserve privacy at the same time, and we should take advantage of this.”

Crypto Market Needs to Mature

Buterin explained that the crypto industry should not be going after institutional capital as the ecosystem needs to mature first. Still, he is somehow happy that the SEC keeps rejecting applications for spot ETFs.

Another maybe-controversial take of mine is that I don’t think we should be enthusiastically pursuing large institutional capital at full speed. I’m actually kinda happy a lot of the ETFs are getting delayed. The ecosystem needs time to mature before we get even more attention.

— vitalik.eth (@VitalikButerin) October 30, 2022

The discussion over regulating crypto has gained traction recently. Especially after FTX founder Sam Bankman-Fried published a policy statement explaining how he thinks crypto should be regulated.

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