Ethereum Founder Talks Crypto Regulation And Institutional Investment

On Sunday, Vitalik Buterin, the co-founder of Ethereum, shared his opinion on the regulatory debate that has been happening in the crypto market.

He shared his thoughts on what rules should be included in the industry and the ones that should be avoided.

Regulation

Crypto regulation could make digital currencies more acceptable in the eyes of mainstream financial institutions, as it would legitimize them as a proper asset class.

However, the industry’s DNA could be completely altered due to the new policies and rules, especially when it comes to decentralization and censorship resistance.

According to Buterin, preserving decentralization should be the priority and this means that the industry should not pursue massive institutional investment.

He stated that regulation that allows the crypto market the freedom to act internally but makes it difficult for crypto projects to reach the mainstream was a much better deal, as compared to regulation that would affect its internal workings.

The Twitter thread from Buterin comes 10 days after Sam Bankman-Fried, the CEO and founder of the FTX crypto exchange, published a controversial blog post.

The chief executive had outlined his regulatory vision for the crypto industry in the blog post.

FTX CEO

Since the blog post invited a lot of controversies, the CEO eventually revised his post and also said that he would continue making changes.

He had received pushback from Crypto Twitter regarding the potential rules he had outlined related to decentralized finance (DeFi).

These included requiring crypto websites to be registered as broker-dealers and ensuring compliance of decentralized autonomous programs with sanctions in the United States.

According to a new survey from Fidelity Investments, the existence of regulatory uncertainty is a major barrier in terms of institutional crypto investment.

More than 1,000 institutional investors had been involved in the study titled Institutional Investor Digital Assets Study.

The results

According to the results of the study, 16% of the participants said that they considered the lack of crypto regulation an obstacle when it comes to investing in digital assets.

In comparison, more than 81% of institutional investors said that digital assets can play an important role in investment portfolios.

Moreover, there were also 43% of institutional investors had expressed interest in investing in a Bitcoin ETF.

For a decade, a number of segments of the crypto market have been in pursuit of institutional capital. This first began in 2013 when the Winklevoss twins filed for a Bitcoin trust that was similar to an ETF.

Even though the Chicago Mercantile Exchange does offer futures-based products for trading, the Securities and Exchange Commission (SEC) has been dragging its feet in granting approval for a spot-based Bitcoin ETF.

Buterin thinks this is actually a good thing. He said that the delay in ETF was good because the crypto ecosystem has to mature first before they get more attention.

He said that there were two categories of policy goals; providing consumers better protection when navigating the industry and stemming the illegal flow of crypto.