Vitalik Buterin, the founder and chief developer of Ethereum, has expressed his worries about the current state of the cryptocurrency sector and how, in his view, it should not be pursuing preferred positions with institutional capital as it is now doing.
Buterin contends that the ways in which cryptocurrency businesses and projects seek regulatory compliance to further their own goals could expose the sector to the dangers of centralization.
At their heart, blockchain and cryptocurrency technologies were created to be defiant to government censorship, centralization, and control. This is one of the reasons that the origins of cryptography may be found in the cypherpunk movement from the latter part of the 1980s, which made privacy and security the pillars of a counterculture. Financial institutions appear to view cryptocurrency firms as legitimate businesses with cryptocurrencies themselves as an equally legitimate asset class as a result of regulation, in a sense making the crypto industry more acceptable.
Buterin asserts that cryptocurrency businesses shouldn’t be “pursu[ing] massive institutional capital at full speed,” and he is “glad” about the delays for ETFs (Exchange-Traded Funds) based on digital currencies like ETH or BTC. The broader ecology of cryptocurrencies, according to Buterin, “needs time to mature before we gain even more attention.”
According to Buterin, maintaining a safe environment for those who may be just getting started in the cryptocurrency industry should go hand in hand with the purpose of protecting consumer interests. Buterin has emphasized the need for Know-Your-Customer policies for the user interfaces of decentralized banking systems. Financial institutions put these same rules into practice, particularly when it comes to fraud and AML (anti-money laundering).
Buterin holds that further regulatory measures, such as restrictions on the amount of leverage a user can trade with, rules governing code audits, and the requirement of “knowledge-based checks,” could be beneficial, particularly for decentralized finance. The co-founder of Ethereum has also stated that he fully supports legislation that makes use of zero-knowledge proofs’ advantages to protect privacy throughout the cryptocurrency ecosystem.
