Vitalik Buterin, the co-founder of the Ethereum (ETH) blockchain, took to Twitter to express his views on the regulation of the cryptocurrency ecosystem and decentralized finance (DeFi ). According to him, the various regulations should not oppose the intrinsic objectives of cryptocurrencies.
Vitalik Buterin gives his opinion on the adoption of cryptocurrencies
After one week punctuated by the tweets of Sam Bankman-Friedthe CEO of FTX, who has received widespread criticism for his approach to possible regulation of decentralized finance (DeFi), it’s Vitalik Buterin’s turn to join the discussion.
Thus, the co-founder of the Ethereum (ETH) blockchain wanted to point out the adoption of cryptocurrencies by institutions and the financial influence that the latter could have vis-à-vis the ” how cryptocurrencies inherently worked “.
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
“Another view of mine, perhaps controversial, is that I don’t think we should be enthusiastically chasing big institutional capital at full speed. In fact, I’m pretty happy that a lot of ETFs are being delayed. The ecosystem needs time to mature before attracting even more attention. »
ETFs, for “Exchange Traded Funds”, are funds traded on the stock exchange which have the particularity of replicate another stock index to match their profitability.
Further, he adds:
“Regulation that leaves the crypto space free to operate internally, but makes it more difficult for crypto projects to be accessible to the general public, is much less bad than regulation that interferes with the inner workings of crypto. »
In other words, the regulation of cryptocurrencies must not harm the intrinsic objective of the latter, namely their resistance to censorship and decentralizationeven if it means that their adoption is more difficult for individuals.
👉 To deepen – What are the risks of central bank digital currencies (MNBC)?
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The eternal problem of regulation
According to Vitalik Buterin, it seems natural that centralized exchanges (CEX) require their users to complete the identity verification process (KYC) before they can perform certain operations. However, according to him, this doesn’t have the slightest interest in decentralized finance insofar as hackers will not be impacted by a possible implementation of this rule:
“The idea of ’KYC on DeFi frontends’ doesn’t seem very useful to me: it would annoy users but do nothing against hackers. Hackers are already writing custom code to interact with contracts. Exchanges are clearly a much smarter place to do KYC, and it’s already happening. »
However, he offered a few ideas that he thinks could improve decentralized finance:
- Limit leverage effects;
- Demand more transparency on audits and security checks on smart contracts;
- Base the use of DeFi on knowledge tests and not on “minimum rules of plutocratic net wealth”.
In short, rules that would contribute effectively to protect the user without ever constraining him. Finally, he adds that regulation should be compatible with zero-knowledge proof (zero knowledge proofor ZKP), this method “ offering many opportunities to satisfy regulatory policy and privacy objectives at the same time “.
Vitalik’s tweet was noticed by Sam Bankman-Friedwho simply replied: All in all, it seems pretty reasonable! »
👉 Read also – Hong Kong wants to legalize cryptocurrency trading next March
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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