Vitalik Buterin advocates controversial crypto regulation
Ethereum initiator and co-founder Vitalik Buterin offers his own take on crypto regulation after discussions erupted on the topic. Despite technical difficulties, he wants the DeFi sector to be regulated and thus takes a controversial position himself.
Institutional investors bad for crypto?
Sam Bankman-Fried recently made a statement that brought him massive criticism. The founder of the crypto exchange FTX wants strict regulation of the crypto industry . For the majority of the liberal scene, this idea is a real horror.
Ethereum initiator Vitalik Buterin is now also taking a stand . Buterin has long been one of the most influential and well-known people on the scene. In his opinion, it is unfair to “let crypto-Twitter attack other people” and keep a low profile.
He currently does not consider institutional investments in the industry to be beneficial. In his opinion, the industry must first continue to mature. Regulation that makes access to cryptocurrencies more difficult is therefore far less harmful than those that want to dictate how cryptos work internally.
While some on the scene welcome institutional investors, there are also some strong critics. Above all, supporters see the chance of enormous price growth through the influx of huge amounts of money.
Critics, on the other hand, fear that price manipulation by institutions will increase, which could result in enormous damage for individual investors.
Buterin: KYC in DeFi not effective
In addition, Buterin believes that KYC is not expedient in the DeFi area. This is how he writes:
KYC would harass regular users but would do nothing against hackers.
The surveillance measure has been common on crypto exchanges with access to fiat currencies for several years. Hackers would not be affected in the decentralized world of finance because they access the underlying smart contracts through individually designed program code and therefore bypass the barriers.
Vitalik Buterin: Regulating DeFi still makes sense
The fact that Vitalik Buterin also has a controversial opinion on crypto regulation is ultimately noticeable with regard to the DeFi sector. Buterin says that regulating DeFi makes sense, just not through KYC.
The Ethereum inventor believes that certain limits and necessary standards could have a positive effect on consumer protection within DeFi.
Accordingly, Buterin wants leveraged trades to be limited. In addition, transparency in terms of safety checks and audits is urgently needed. In this way, even the simple user can assess how secure the respective dApp is.
Finally, users can also be protected by knowledge tests. Instead of minimum requirements for the user’s capital, Buterin would like a lower limit for the user’s specialist knowledge.
All positions that speak in favor of DeFi regulation are controversial. After all, DeFi lives from its inviolability from the authorities. Technically, however, such requirements are hardly enforceable anyway.
Buterin wants to focus on the public interfaces of the dApps. A failed ban on Tornado.Cash recently showed that although a commercially available domain can be censored, access via decentralized networks such as IPFS is still possible.
