Vitalik Buterin Criticizes US Crypto Regulation as ‘Anarcho-Tyranny’

Ethereum co-founder Vitalik Buterin criticized the current US regulation of cryptocurrencies as securities and proposed a path for its improvement.

In a post on Warpcast, a social platform on the Farcaster protocol, the programmer described the dilemma that existing rules create for project developers.

On one hand, the system effectively encourages the creation of useless tokens and promises of uncertain profits, allowing them to remain outside the scrutiny of regulators, Buterin emphasized.

On the other hand, if clear information is provided to clients about their rights and the project’s tokenomics, the product is classified as a security with all the ensuing consequences, he noted.

“The incentive gradient created by this ‘anarcho-tyranny’ ultimately turns out to be worse for the space than just one of these things,” Buterin stated.

He expressed hope for a shift to the opposite situation, where issuing a token “without providing a clear long-term story about why it will retain or increase its value” would become a riskier endeavor.

Conversely, conscientious disclosure and adherence to basic rules would allow projects to remain “safe” from regulators.

“In reality, achieving this will require good faith engagement from both regulators and the industry,” Buterin concluded.

His message was a response to Ethereum community member Jason Chaskin, who recalled the programmer’s tweet with recommendations on combating unscrupulous activity in DeFi. In September 2022, Buterin proposed at the frontend level:

• limiting leverage;
• transparently informing about mandatory audits and security checks of the project;
• restricting access for users with insufficient knowledge through testing.

Previously, Buterin described blockchain as a safeguard against authoritarian regimes, while Wintermute CEO Evgeny Gaevoy criticized him for attempts to build “planned socialism.”