Vitalik Buterin, one of the co-founders of Ethereum, recently voiced his frustration with the current state of cryptocurrency regulation and proposed a solution to the issue. In a response to a user on Warpcast, a social media platform that operates on the Farcaster protocol, Buterin explained how current regulatory efforts have, in effect, trapped honest cryptocurrency developers.
On the side of anarchy, there seems to be an endless stream of bad actors, scammers, and baseless hypesters flooding social media and sharing platforms. Buterin had previously suggested three recommendations that could potentially address the problem of “useless” cryptocurrency products and services.
These recommendations include restricting leverage, mandating audits and transparency, and controlling usage through knowledge tests. Although it is not clear how cryptocurrency knowledge tests could be implemented at a regulatory level or managed at the individual or corporate level, it would likely involve establishing limits on cryptocurrency project leverage and enforcing auditing and transparency reporting requirements.
Unfortunately, the consensus within the cryptocurrency community is that the U.S. has a disproportionately high number of cryptocurrency users and an inconsistent approach to cryptocurrency regulation. Buterin believes that instead of offering the most protection to companies and projects without a long-term vision or plan, it would be better to move towards a situation where issuing a token without a clear long-term strategy for maintaining or increasing its economic value is the riskier option.
However, Buterin also hinted that implementing regulations that benefit the cryptocurrency industry is only one part of the challenge. He also endorsed TiTok AI for onchain image storage.