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Vitalik Buterin, the co-founder of Ethereum (ETH), has expressed his dissatisfaction with the way cryptocurrency regulation is handled in the United States. During a recent interaction on Warpcast, Buterin argued that the current regulatory system encourages the creation of projects that make vague promises without offering real substance. He further stated that if crypto returns and rights are classified as securities, the focus should shift towards developing tokens that maintain or increase in economic value. Buterin emphasized that achieving this shift requires genuine collaboration between regulators and the crypto industry.
The conversation was initiated on June 28 when Jason, a member of the Ethereum Foundation, posted on Warpcast, reflecting on a tweet Buterin had made in 2022 during a debate on Sam Bankman-Fried’s proposed frontend regulation. In the tweet, Buterin suggested several regulations for decentralized finance (defi) platforms that could reduce the number of opportunists in the industry and enhance safety. Jason shared the post, expressing his continued belief in the value of Buterin’s proposed regulations and invited him to share his current thoughts on the matter. Jason also proposed the idea of a popup that displays the current tokenomics breakdown of a coin before a swap, with links to Etherscan showing how top holders acquired their coins.
In response to Jason on June 29, Buterin highlighted the core issue with crypto regulation, particularly in the U.S. He pointed out that projects making vague promises can operate freely, while those providing clear information about returns and rights are often classified as securities and face stricter regulations. He referred to this as an “anarcho-tyranny” that is harmful to the crypto space. Buterin expressed his desire for a regulatory environment where issuing a token without a clear long-term value proposition is riskier. He believes that providing a transparent long-term outlook and adhering to best practices should offer safety for crypto tokens. However, achieving this would require genuine engagement from both regulators and the industry.
Buterin’s comments come following a U.S. judge’s decision on June 28 to dismiss the claim by the U.S. Securities and Exchange Commission (SEC) that secondary sales of Binance’s BNB token qualify as securities. This ruling, influenced by the SEC vs. Ripple case, highlighted the importance of the economic reality of transactions in applying the Howey Test. The judge ruled that secondary sales of Binance Coin do not qualify as securities, which is considered a significant win for crypto traders.
In related news, Nigeria’s top finance investigator recently stated that blockchain technology can combat illicit fund transfers.
