“You’re screwed” because you’re a “security guard”

Ethereum (ETH) co-founder Vitalik Buterin has expressed his dissatisfaction with the way the United States is handling cryptocurrency regulation.

In a recent discussion on Warpcast, Buterin stated that he believes the current regulatory system promotes the creation of projects that offer vague promises of profits that have no basis in reality.

Buterin further argued that if cryptocurrency returns and rights are classified as securities, the emphasis should shift toward the development of tokens that maintain or increase economic value.

Additionally, the Ethereum co-founder emphasized that this change requires sincere cooperation from both regulators and the crypto industry.

It all started on June 28, when an Ethereum Foundation member named Jason posted on Warpcast reflecting on a tweet Buterin posted in 2022 during a debate on Sam Bankman-Fried’s proposed front-end regulation.

In his tweet, Buterin suggested several regulations on the user interfaces of decentralized finance (defi) platforms that could help reduce the number of opportunists in the industry and increase security.

These included leverage limits, transparency of audits or other contract code security checks, and use controlled by knowledge-based testing rather than minimum net worth rules.

Sharing the post, Jason stated that he still believes in the value of Buterin’s proposed regulations and invited the Ethereum co-founder to share his thoughts on the matter.

Jason also proposed the idea of ​​a popup that would display the current tokenomics analysis of a given coin before the swap, with links to Etherscan showing how top holders acquired their coins.

In response to Jason on June 29, Buterin highlighted a fundamental problem with cryptocurrency regulation, particularly in the U.S.

He pointed out that projects offering vague promises can operate freely, but those that provide clear information about returns and rights are often classified as securities and subject to stricter regulation. He called it “anarcho-tyranny” that is harmful to the crypto space.

The biggest challenge with cryptocurrency regulation (particularly in the US) has always been this phenomenon where if you do something useless or ask people for money in exchange for vague references to potential profits, at best you are free and clear, but if you are trying to present to your customers a clear history of where the phrases come from and the promises regarding their rights, then you are in trouble because you are a “collateral”

Vitalik Buterin, co-founder of Ethereum

Buterin also wants the regulatory environment to allow for riskier token issuance without a clear, long-term value proposition.

In his opinion, providing a transparent, long-term perspective and adhering to best practices should ensure the safety of crypto tokens. Achieving this, he noted, would require real commitment from both regulators and the industry.

Buterin’s comments came after a US judge’s June 28 decision to dismiss a claim by the US Securities and Exchange Commission (SEC) that the secondary sale of Binance’s BNB token qualified as securities.

This decision was influenced by the case SEC vs. Ripple, in which the economic reality of transactions was emphasized through the application of the Howey test.

A judge has ruled that Binance Coin secondary sales do not qualify as securities, marking a significant win for cryptocurrency traders.