Vitalik Buterin reveals the main challenge of regulating cryptocurrencies

Gamza Khanzadaev

Vitalik Buterin criticizes cryptocurrency regulation, highlighting the discrepancy that sees meme coins like Dogecoin thrive while projects like XRP face tougher scrutiny

Ethereum founder Vitalik Buterin reached out to Farcaster to highlight an important issue in the cryptocurrency regulatory landscape, particularly in the United States. He noted that projects promising unclear returns often operate freely, while those with a clear value proposition are subject to stringent regulation. According to Buterin, this creates a counterproductive environment for the industry.

Noting the problematic incentive gap created by this regulatory approach, he suggested that it is detrimental to the crypto space as a whole. He believes that the current system, which can be described as “anarcho-tyranny”, is worse than total regulatory anarchy or strict regulatory tyranny.

A key aspect of this perspective is the contrasting treatment of different cryptocurrencies. For example, meme coins like Dogecoin, which often lack a clear value proposition, seem to navigate the regulatory environment more easily. In contrast, more established projects like Ethereum, Cardano, and XRP, which offer their users detailed plans and promises, often face regulatory hurdles.

Good faith

Buterin advocates for a change in regulatory practices. He suggests that issuing tokens without a clear long-term value proposition should be considered riskier. On the other hand, projects that offer clear value stories and follow best practices should be considered safer and face fewer regulatory challenges.

To achieve this change, Ethereum’s founder calls for fair cooperation between regulators and the cryptocurrency industry. It believes that such cooperation is essential to create a more sustainable and productive regulatory framework.

According to Buterin, this approach would encourage innovation while ensuring that investors are protected and well informed about the projects they support.

About the author

Gamza Khanzadaev