Vitalik Buterin: “Crypto still ‘needs time to mature’ before mainstream adoption” <br><br>

Crypto regulation and adoption

Vitalik Buterin: “Crypto still ‘needs time to mature’ before mainstream adoption”

Joining the discussion in a series of posts on Twitter, Vitalik Buterin, co-founder of Ethereum claimed that before the industry pursues “large institutional capital at full speed,” the crypto ecosystem “needs time to mature before we get even more attention.” He believes that the crypto industry needs to go hand-in-hand with regulatory policies that let the crypto industry work independently and seamlessly, especially internally.

In the past few days, FTX CEO Sam Bankman-Fried (SBF) has remained the topic of much-rounded criticism for sharing his views on crypto-regulatory proposals and on Defi regulations. Whereas Vitalik spoke against the regulations that are impacting the crypto ecosystem and its inner workings, he opined, “I’m actually kinda happy a lot of the ETFs are getting delayed.”

In contrast to the views of SBF, Buterin believes that at present the reduced speed of adoption is preferable to keep crypto fully open and internally independent rather than to make compromises to keep crypto regulation free at the protocol level.

He said, “I’m actually kinda happy a lot of the exchange-traded funds (ETFs) are getting delayed. The ecosystem needs time to mature before we get even more attention.”

ETH founder expressed that the crypto industry must be “free to act” and a delay in mainstream adoption is a good sign for the space. He commented, “The regulation that leaves the crypto space free to act internally but makes it harder for crypto projects to reach the mainstream is much less bad than regulation that intrudes on how crypto works internally.”

According to Vitalik,  the use of any form of KYC (know your customer) for front-end DeFi products would be pointless in deterring hackers as the front end of the project is usually ignored by the bad actors because hackers interact directly with smart contracts by writing a code. Although he has pointed out, KYC can be used for crypto exchange, that has already seen wide-scale implantation.

He said, “It (KYC on DeFi frontends) would annoy users but do nothing against hackers. Hackers write custom code to interact with contracts already.”

As per the entrepreneur, “There’s two main classes of regulatory policy goals: (i) consumer protection, (ii) making it harder for baddies to move large amounts of money around. The issues around (ii) are concentrated not in defi, but in large-scale crypto payments in general.”

Vatalik Tweeted “Regulations on defi frontends that *could* be more helpful”  and that could improve DeFi:

(i) limits on leverage

(ii) requiring transparency about what audits, FV, or other security checks were done on contract code

(iii) usage gated by knowledge-based tests instead of plutocratic net-worth minimum rules

Vatalik recommended that regulations be compatible with “zero-knowledge proofs,” as they preserve user’s privacy, he 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.”