US cryptocurrency regulations promote “useless” tokens

Ethereum co-founder Vitalik Buterin has criticized the US regulatory approach to cryptocurrencies, in particular the consistent classification of utility tokens as securities.

Buterin argues that this approach discourages the creation of meaningful crypto projects and promotes the creation of “useless and obscure” tokens.

Buterin advocates for balanced cryptocurrency regulation to support growth

The Ethereum co-founder believes the current regulatory system has cornered well-intentioned cryptocurrency creators. According to Buterin, this approach is damaging the cryptocurrency industry and could ultimately lead to anarchy or tyranny.

“If you’re doing something useless or asking people for money in exchange for vague references to potential refunds, at best you have freedom and clarity, but if you try to give your customers a clear story about where the refund is coming from and promises what their rights are, then you’re screwed because you’re the ‘collateral,’” Buterin said.

Instead, he envisions a future where issuing a token without a clear, long-term economic value story is riskier, while projects that provide such a story and adhere to best practices are safe. But achieving this requires “good faith engagement from regulators and the industry.”

“I would prefer that we move to the opposite situation, where it is riskier to issue a token _without_ providing a clear, long-term story about why it will maintain or increase its economic value, and if you _give_ that long-term story and follow basic best practices, then you are safe,” Buterin noted.

Read more: Ethereum (ETH) Price Forecast for 2024/2025/2030

Buterin’s stance resonates with many industry leaders who have criticized the U.S. government’s handling of the nascent cryptocurrency sector. Proponents are pushing for regulation tailored to the unique nature of cryptocurrencies and decentralized platforms, an approach they say is key to protecting investors and fostering technological advancement without imposing undue restrictions.

However, the SEC, led by Gary Gensler, has consistently criticized industry participants for failing to comply with applicable securities laws. For this reason, the financial regulator has announced that major crypto assets such as Solana and Cardano securities are protected. Additionally, it has filed lawsuits against large crypto companies such as Coinbase, Binance, and Kraken over their crypto products that allegedly violate local regulations.

Read more: Who is Gary Gensler? Everything you need to know about the SEC chairman

These issues have made cryptocurrencies a significant political issue in the upcoming November election. Cryptocurrency companies are donating to cryptocurrency-related political associations to support crypto-related candidates. These efforts have yielded significant results, with former President Donald Trump’s support for cryptocurrencies bolstering his position in the election.