Ethereum co-founder Vitalik Buterin has criticized the US regulatory approach to cryptocurrencies, especially the consistent classification of utility tokens as securities.
Buterin argues that this approach discourages meaningful crypto projects and promotes the creation of “useless and vague” tokens.
Buterin Advocates for Balanced Crypto Regulations to Foster Growth
The Ethereum co-founder believes the current regulatory regime has cornered well-intentioned cryptocurrency developers. According to Buterin, this approach harms the crypto industry and could eventually lead to anarchy or tyranny.
“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,’” Buterin stated.
Instead, he envisions a future where issuing a token without giving a clear long-term story for its economic value is riskier, while projects providing such a story and following best practices are safe. However, achieving this requires “good-faith engagement from regulators and the industry.”
“I would much rather see us move to the opposite situation, where issuing a token _without_ giving a clear long-term story for why it will maintain or increase in economic value is the riskier thing, and if you _do_ give such a long-term story and follow basic best practices then you’re safe,” Buterin remarked.
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Buterin’s stance resonates with numerous industry leaders who have bashed the US government’s handling of the emerging crypto sector. Advocates push for regulations tailored to the unique nature of crypto and decentralized platforms. They believe this approach is crucial to safeguarding investors and fostering technological growth without imposing excessive restrictions.
However, the Gary Gensler-led SEC has consistently criticized industry participants for not adhering to existing securities laws. Due to this, the financial regulator has declared major crypto assets like Solana and Cardano securities. Additionally, it has filed legal actions against major crypto firms like Coinbase, Binance, and Kraken over their crypto products that allegedly violate local laws.
Read more: Who Is Gary Gensler? Everything To Know About the SEC Chairman
These issues have made crypto a significant political topic in the upcoming November elections. Crypto firms are donating to crypto-related political associations to support crypto-aligned candidates. These efforts have yielded significant results, with former President Donald Trump’s support for crypto boosting his position in the elections.
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