Ethereum co-founder Vitalik Buterin has voiced his dissatisfaction with the current state of cryptocurrency regulation in the United States. In a recent discussion on Warpcast, Buterin highlighted the issues he perceives within the regulatory system, particularly how it affects the development and operation of crypto projects.
On June 28, an Ethereum Foundation member, Jason, shared a post on Warpcast, referencing a tweet from Buterin in 2022. The tweet proposed several regulations for decentralized finance (DeFi) platforms. These included limits on leverage, transparency about audits or security checks on contract code, and usage gated by knowledge-based tests rather than net-worth minimum rules. Jason expressed his continued belief in the value of these regulations and invited Buterin to share his current thoughts.
Responding on June 29, Buterin pointed out that projects with vague promises of returns can operate without much restriction. However, those that provide clear information about returns and rights are often classified as securities and face stricter regulations. He referred to this situation as an “anarcho-tyranny” that harms the crypto space. Buterin believes this regulatory environment discourages transparency and honesty in the industry.
The main challenge with crypto regulation, especially 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
Buterin also argued that there should be more risk for issuing a token without a clear long-term value proposition. He believes that providing a transparent long-term outlook and adhering to best practices should offer safety for crypto tokens. Achieving this, he noted, requires genuine engagement from both regulators and the industry.
These comments come shortly after a U.S. judge’s decision on June 28 to dismiss the U.S. Securities and Exchange Commission’s (SEC) claim that secondary sales of Binance’s BNB token qualify as securities. This ruling was influenced by the SEC vs. Ripple case, which emphasized the economic reality of transactions in applying the Howey Test. The judge ruled that secondary sales of Binance Coin do not qualify as securities, marking a significant win for crypto traders.
Buterin’s remarks underscore the ongoing tension between the crypto industry and regulators. As the debate continues, the future of cryptocurrency regulation remains uncertain, with both sides needing to find common ground for the industry’s growth and safety.
