Buterin: Blockchain Industry Needs More Maturity
Buterin believes that the blockchain industry is not yet mature enough to warrant more widespread attention.
I'm happy that regulators are still rejecting crypto ETFs. I think it's good for the market in the long run.
It is clear that the crypto industry still has a long way to go in terms of attracting institutional investors. However, this is to be expected given the lack of a comprehensive regulatory framework governing the market. Buterin's Twitter thread highlights the need for such a framework in order to attract more institutional investors and move the industry forward.
Buterin: Rejected Crypto ETFs are Good for the Industry
The software developer believes that the crypto space needs time to attain certain growth. He believes that a complete regulatory model is necessary in order to weed out bad actors from exploiting the ecosystem. He also believes that before ETFs are embraced, the crypto space needs to be further developed.
Another maybe-controversial take of mine is that I don’t think we should be enthusiastically pursuing large institutional capital at full speed. 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.
— vitalik.eth (@VitalikButerin) October 30, 2022
The SEC's decision to deny Bitcoin spot ETFs has been a major blow to the cryptocurrency community. However, many believe that this is only a temporary setback. Cryptocurrencies have made incredible strides in recent years and are becoming more and more mainstream. It is only a matter of time until a Bitcoin ETF is finally approved.
Buterin: Regulations Will Stifle DeFi Innovation
I believe that KYC regulations will not be effective in preventing hackers from exploiting decentralized finance protocols. Hackers will find ways to circumvent these regulations, so we need to focus on other ways to secure these systems.
It is clear that the new rules proposed by the SEC would only apply to the front end of platforms like Ethereum. However, it is also clear that hackers could still write code to interact with smart contracts through the back end. This means that the SEC's new rules may not be enough to protect investors from fraud and manipulation.
The “KYC on defi frontends” idea does not seem very pointful to me: it would annoy users but do nothing against hackers. Hackers write custom code to interact with contracts already. Exchanges are clearly a much more sensible place to do the KYC, and that’s happening already.
— vitalik.eth (@VitalikButerin) October 30, 2022
I believe that regulations on the front end could work if focused on limits on leverage, requiring transparency about audits and usage gated by knowledge-based tests instead of imposing net-worth minimum rules. This would allow for a more level playing field and could help to prevent some of the abuses that have occurred in the past.
Two Main Regulatory Policy Goals: To Keep You Safe and To Save You Money
Buterin highlighted the two main goals of regulatory policies: consumer protection and making it impossible for malicious actors to move funds around the ecosystem. He stressed the importance of these goals, noting that they are essential for the continued growth and development of the cryptocurrency industry.
It is clear that the crypto payment systems need to be improved in order to achieve the second goal of the DeFi ecosystem. The issues are not just with the DeFi ecosystem but with the entire crypto payment system. This includes centralized exchanges like Binance, Coinbase, and FTX.
Basically, there’s two main classes of regulatory policy goals: (i) consumer protection, (ii) making it harder for baddies to move large amounts of money around. The issues around (ii) are concentrated not in defi, but in large-scale crypto payments in general.
— vitalik.eth (@VitalikButerin) October 30, 2022
It is clear that regulation is top of mind for many in the cryptocurrency industry. Buterin is not the only key player to comment on crypto regulations in recent times. Earlier this month, Sam Bankman-Fried, CEO of the leading crypto exchange FTX, shared his regulatory visions for the industry. It is clear that those in the industry are working to ensure that cryptocurrencies are regulated in a way that protects investors and promotes innovation.
The billionaire chief noted that the cryptoverse needs clear regulatory oversight to protect consumers from theft to ensure an open, free economy where users can transfer funds without restrictions. He believes that this will help to create more opportunities for innovation and development in the space.
I am glad that a lot of ETFs are getting delayed. This gives me more time to build up my crypto portfolio and make it more diversified. I believe that in the long run, this will be beneficial for me and other investors.
