Ethereum co-founder Vitalik Buterin believes that the cryptoecosystem must evolve and conform to a regulatory policy that allows cryptoprojects to operate freely, rather than chasing institutional funds.
Buterin believes that regulation should ensure that cryptoprojects are internally independent, even if it hinders the mass adoption of digital assets.
“I’m actually kind of glad that a lot of exchange-traded funds (ETFs) are delayed. The ecosystem needs time to mature before we get any more attention,” he added.
He also opined that the use of KYC in decentralized finance (DeFi) interfaces is detrimental to users, but does not secure them in any way.
Nevertheless, he stressed the need for KYC on crypto exchanges, which have become widespread.
“KYC on DeFi interfaces will annoy users, but will do nothing against hackers. Hackers are already writing their own code to interact with contracts,” Buterin said.
Buterin added that regulators can help the development of the market by imposing restrictions on the use of leverage and conducting audits of the code. The Ethereum creator also emphasized that requirements to clients should not be based on their capital, but on their knowledge of cryptocurrencies.
He also noted that regulation should be spelled out so that its requirements can be met with zero disclosure proof (ZKP).
“In addition, I would like to see regulations written in such a way that the requirements can be met to the maximum extent possible by ZKP. ZKP offers many new opportunities to meet the goals of the registration policy while preserving privacy, and we should take advantage of that!” he concluded.
Buterin’s opinion was also echoed by Sam Bankman-Fried, founder of the FTX exchange.