Vitalik Buterin Criticizes Current Crypto Regulations as ‘Anarcho-Tyranny’

Ethereum co-founder Vitalik Buterin recently shared his views on the current state of cryptocurrency regulations in the U.S., describing them as “anarcho-tyranny.” He noted the paradox where projects offering vague promises operate freely while those providing clear information face strict scrutiny.

He argues that this is more damaging to the industry than pure anarchy or tyranny alone. Buterin suggests changing the model of regulation that penalizes vague projects and supports those with transparent, long-term value propositions. This change cannot happen without a genuine partnership between the current regulators and the crypto industry.

Buterin voiced his concerns on Warpcast, a social media platform built on the Farcaster protocol. He pointed out that projects engaging in dubious activities without clear value propositions can avoid regulatory consequences. In contrast, projects attempting to provide clarity and transparency often face penalties for being classified as securities. This contradictory regulatory environment creates what Buterin calls an “anarcho-tyranny,” detrimental to the cryptocurrency space.

The Ethereum co-founder believes that bad actors, scammers, and hype projects are the main reasons behind the anarchic part of the industry. To counter this, Buterin has previously suggested three measures: limiting leverage, requiring audits and transparency, and implementing knowledge tests for participants. These steps aim to address the proliferation of “useless” cryptocurrency products and services. However, the practical implementation of these knowledge tests at a regulatory level remains uncertain. Policy measures to limit leverage and establish auditing requirements are more likely to be adopted.

Despite these suggestions, Buterin acknowledges the challenges within the U.S. regulatory landscape. The U.S. has a significant number of cryptocurrency users but lacks consistent and clear regulatory guidelines. Buterin advocates for a regulatory environment that supports projects with long-term visions and clear economic value narratives. He argues that issuing tokens without a solid long-term story should be riskier than those providing transparency.

Achieving a beneficial regulatory framework requires good-faith engagement from both regulators and industry participants. Buterin emphasizes that sincere collaboration between these parties is crucial for fostering an environment that encourages innovation while protecting investors and users.