Ethereum creator Vitalik Buterin took to Twitter to share some “maybe-controversial” opinions on crypto regulation.
In a series of tweets on Sunday, Buterin said that the right kind of regulation would be one that gives the crypto space freedom to act internally, even if it means that it is harder for these projects to reach the mainstream.
In fact, he doesn’t believe that aggressively persuading institutional capital is the right way forward for the industry at this stage.
“I’m actually kinda happy a lot of the ETFs are getting delayed. The ecosystem needs time to mature before we get even more attention,” Buterin said.
However, the Ethereum creator said that the idea of “KYC on DeFi frontends” does not seem very “pointful,” as he put it, because it would annoy daily users but have no effect against hackers that target them.
“Hackers write custom code to interact with contracts already. Exchanges are clearly a much more sensible place to do the KYC, and that’s happening already,” said Buterin.
In his view, more useful front end regulation for DeFi could be limits on leverage, more transparency in audits and usage based on knowledge-based tests on smart contract code as opposed to “plutocratic net-worth minimum rules.
The proposed regulation of front end interfaces on decentralized platforms has become a widely debated topic within the crypto space of late. Last week, FTX CEO Sam Bankman-Fried (SBF) became the subject of scrutiny when he suggested adopting a voluntary set of standards to regulate the entities that build these front-end DeFi interfaces.
“If DeFi front-ends catering to Americans need to be licensed, DeFi in America dies,” said ShapeShift CEO Erik Voorhees in a two-hour long debate on Bankless with SBF on Friday.
SBF said that the most important aspect of the impending regulation was that it allowed for smart contracts, validators and payments to remain open and free.
“Because of that, I am relatively willing to accept compromises if they preserve the things that I believe have the vast majority of the value for DeFi,” said SBF.