Vitalik Buterin Is Happy the US SEC Is Rejecting Crypto ETFs: Here's Why

Ethereum co-founder Vitalik Buterin, in sharing his opinion on crypto regulation, declared that he is “kinda happy” that exchange-traded funds (ETFs) are being delayed. In a lengthy thread on Twitter, Vitalik Buterin discussed how regulations would impact crypto. According to Buterin, all regulations focus on either consumer protection or making it difficult for bad actors to move large amounts of money around. Buterin also showed support for regulations that could make it easier for the industry to reach mainstream adoption.

Buterin notes that regulations that limit the mainstream growth of crypto are as bad as those regulations that hurt crypto projects internally.

The Ethereum co-founder also reacted to the proposed KYC for decentralised finance (DeFi) frontends put forward by FTX's founder Sam Bankman-Fried. According to him, KYC for DeFi is pointless and would only annoy the users. In Buterin's view, all regulations focus on achieving two goals — consumer protection and making it difficult for criminals and bad actors to move large amounts of money around.

When it comes to bad actors moving money around, Ethereum founder Vitalik Buterin said these issues are not only "concentrated in DeFi, but in large-scale crypto payments in general." Still, he recommended regulations for the DeFi frontends. These included a limit on leverage, requiring transparency on audits and security checks for contract codes, and limiting usage by knowledge-based tests instead of net worth.

Buterin said, "I would love to see rules written in such a way that requirements can be satisfied by zero-knowledge proofs as much as possible. ZKPs offer lots of new opportunities to satisfy reg policy goals and preserve privacy at the same time, and we should take advantage of this."

Buterin explained that the crypto industry should not be going after institutional capital as the ecosystem needs to mature first. Still, he is somehow happy that the SEC keeps rejecting applications for spot ETFs.

The discussion over regulating crypto has gained traction recently, especially after FTX founder Sam Bankman-Fried published a policy statement explaining how he thinks crypto should be regulated.

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