Recently, Ethereum’s co-founder and major cryptocurrency personality Vitalik Buterin Ethereum shared his viewpoints about the upcoming cryptocurrency regulations.
Vitalik went on Twitter in order to discuss the impacts of government regulations on cryptocurrency assets. To the surprise of some, Vitalik is not against the regulation of digital currency, instead, he claimed that regulations can facilitate the cryptocurrency’s reach, and broaden the use of these assets by the general population.
Most regulations, according to Vitalik Buterin, seek to achieve two goals: consumer protection and making it difficult for criminals and bad actors to move large quantities of money.
Furthermore, he advised the DeFi front ends on rules. These included putting a cap on leverage, demanding openness on audits and security checks for contract codes, and restricting usage through knowledge-based assessments rather than financial value.
Given the current situation, he considered it preferable to have restrictions that enable crypto projects’ internal autonomy, even if it hampered mainstream acceptance.
“Basically, especially at this time, regulation that leaves the crypto space free to act internally but makes it harder for crypto projects to reach the mainstream is much less bad than regulation that intrudes on how crypto works internally.”
Immature Cryptocurrency Market
Buterin also spoke about how he sees the overall cryptocurrency markets and labeled the overall mentality of “pursuing large institutional capital at full speed” as immature. Furthermore, he claimed that the cryptocurrency industry should not seek institutional money until the ecosystem, claiming that the “ecosystem needs time to mature”.
“Another maybe-controversial take of mine is that I don’t think we should be enthusiastically pursuing large institutional capital at full speed.” He said. “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.”
KYC on DeFi Frontends
Buterin also has expressed worry about the usage of Know Your Customer (KYC) on decentralized finance (DeFi) frontends. However, he emphasized the importance of KYC on cryptocurrency exchanges, which has seen widespread adoption. According to the business owner:
Buterin offered three proposals on this topic:
- 1- limits on leverage
- 2- requiring transparency about what audits, FV or other security checks were done on contract code
- 3- usage gated by knowledge-based tests instead of plutocratic net-worth minimum rules