The debate on the adoption of cryptocurrencies that will have to go through the regulatory box has been driving the ecosystem for some time. And more precisely since then Sam Bankman-Fried, founder of the FTX platform, has set foot on the plate with (very) dubious proposals. Because the subject is dangerous. And the goal must be to preserve at all costs some fundamental aspects such as decentralization and resistance to censorship. The reason why Vitalik Buterinthe main founder of Ethereum, has just provided some important details on the subject.
There is no doubt that the regulatory grip is tightening more and more on the cryptocurrency sector. A situation whose turning point was clearly the attack of the tornado money blender from theOffice of Foreign Assets Control (OFAC)) from the United States last August. But more specifically the zeal shown by some cryptographic projects and structures for enforce this prohibition without having any legal obligation to do so.
A situation accentuated by the recent transition of the Ethereum network to a Proof of Stake version of which resistance to censorship shows serious flaws. To the point that some of its developers are considering – already – a new fork in an attempt to solve this critical problem. Probable reason why Vitalik Buterin has just made a notable entry into the internal debate on regulation of the cryptocurrency industry.
Vitalik Buterin vs Crypto regulation
The topic is very sensitive within the cryptocurrency ecosystem. But believing that this digital economy can continue to exist without any regulation is starting to seem like a sweet utopia.. However, this does not necessarily mean that you should immediately give up some of its founding principles. as Sam Bankman-Fried tried to dobefore changing your mind.
Indeed, decentralization and resistance to censorship should not be dismissed too quickly as mere details of the course. A fact that seems to want to remember Vitalik Buterin. The latter is determined to take part in this debate in order not to “let other people be attacked by CT (crypto Twitter)” in an “unfair” way. But with a more measured and thoughtful stance on what is still possible to do and what seems impossible to avoid.
” Basically, especially right now, regulation that leaves crypto space free to operate internally but makes it harder for crypto projects to reach the general public is far less bad than regulation that interferes with the inner workings of crypto.. “
An acceptable “front-end” regulation.
A fair measure that explains it frontend regulation is not necessarily the worst case scenario in the current state of affairs. Because it involves blocking access to certain sites and services such as Tornado Cash, without touching the fundamentals of the ecosystem.
Knowing that at the same time Vitalik Buterin believes that “the idea of a” KYC DeFi frontend ”doesn’t seem (to him) very relevant. Because ” it would annoy users but do nothing against hackers (who) are already writing custom code to interact with contracts. An obvious answer to Sam Bankman-Fried’s proposals in the area of this decentralized finance. Because in the end the only place where this knowledge of users can make sense is centralized exchanges … “and this is already in place”!
I’m not looking for a lot of money
But obviously the real problem lies elsewhere. Because according to Vitalik Buterin, the scramble for regulation facing the cryptocurrency industry is greatly accelerated by an overly enthusiastic search for “institutional big capital.” Especially considering that a recent study shows that these investment structures no longer even consider cryptocurrencies as “alternative digital assets”.
But if we want to go too far towards this more speculative, ideological or even functional type of “adoption”, will we not end up losing the essential? To the point of creating cryptocurrencies a tool with a strong dystopian potential. A borderline problem that further divides the cryptocurrency ecosystem this central question of acceptable regulation, but also – or above all – desirable adoption.
” Another view of mine that may be controversial is that I don’t think we should enthusiastically pursue big institutional capital at full speed. I’m actually quite happy that many ETFs are lagging behind. The ecosystem needs time to mature before it gets even more attention. “
Maintain confidentiality above all
Because according to Vitalik Buterin, the cryptocurrency ecosystem is still too young to absorb this type of financial instruments and actors from the real economy. And it “needs time to mature” before it can meet the regulatory demands that inevitably arise from this type of investment dynamic. With, for example, the definition of “rules written in such a way that the requirements can be satisfied as much as possible by zero-knowledge proofs. ”
This technology zero knowledge (ZK-Rollup) that Vitalik Buterin loves so much. And with which he always tries protect your private data a little more users in the blockchain and cryptocurrency sector. With the purpose of ” meet regulatory policy objectives while maintaining confidentiality“. Because we must not put profits before ideology, at the risk of losing both …
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