Vitalik Buterin Decries State of Crypto Regulations as ‘Anarcho-Tyranny’
Vitalik Buterin who is an Ethereum co-founder has expressed his dissatisfaction with the current status of cryptocurrency regulations and given an idea on a potential resolution to deal with the issue.
AFP reported that Buterin made these comments during the Warpcast conference, which is a social media service based on Farcaster technology, and he also emphasized that developers face challenges in cryptocurrency due to the regulatory constraints.
Perplexing Phenomenon in Crypto Regulation
Buterin added that the absurdity in the crypto regulation space is most visible in the United States, where some can create projects with vague suggestions of returns and empty activities without any harm occurring to them.
On the other hand, when developers are honest with their buyers offering a clear explanation of the returns and even some guarantees, they are hit with the securities label which should be instead described to the ones who are selling.
Buterin used the newly created phrase “anarcho-tyranny” to stress that the existence of a varying scale of incentives to these companies causes more harm to the industry than what would be if there were a stronger anarchy or tyranny in this area.
Bad Actors Contribute to Anarchic Side of Crypto
Bad actors, scammers, and reckless promoters who are found in social media and sharing platforms are the primary source of the infestation of the anarchic side of the sector.
To eradicate such behavior from the industry, the activist had previously made the proposal on the three suggestions which are focused on getting rid of useless cryptocurrency products and services. The first goal is:
- Limiting leverage
- Implementing audits and transparency measures
- Introducing knowledge tests to regulate usage
The practical implementation of cryptocurrency knowledge tests at a regulatory level or in individual and corporate settings remains uncertain. To first address, it is expected that these agreements will be designed to have a limitation on the leverage employed in cryptocurrency projects and to meet regulations, which demand the companies to audit and report transparently.
A Disproportionate Approach to Regulation
Yet, the community in the cryptocurrency world showed negative indication that the US has the highest number of crypto users but it has no concrete and coherent regulatory framework.
Buterin expressed his preference for a regulatory environment that is biased towards firms that have a real vision and the capacity to provide details on their financial plans. So, a token that is issued and has no clear explanation about its long-term economic value should be the one that will carry more risk.
Need for Collaboration Between Regulation and Industry Participants
On the other hand, Buterin pointed out that in order to lay out a good framework that will be of help to the digital money industry, it will demand both the regulatory and the participants’ understanding. Synergy between these two entities will build a situation wherein there is space for innovation and the safety of the parties involved is adequately cared for.
Buterin Voices Concern About Complex Layer 2 Solutions
Vitalik Buterin has also recently expressed his misgivings about the super advanced Layer 2 scaling solutions. Initially, the Ethereum champion warned against ‘a complex network of various l2’ that could potentially explode and requested a more equal approach to the development of the network.
It is widely believed in the blockchain community that the Layer 1 network should prioritize simplicity to avoid the risk of critical bugs and attack vectors. This means that more advanced functions must be handled by Layer 2 networks, which are developed to provide scaling solutions.
These networks collect transactions that run on a separate network and forward them in batches to Layer 1 for the final validation stage, thereby increasing throughput and decreasing the overall cost of transaction.
