Ethereum co-founder: Institutions shouldn’t go ‘full speed’ into crypto
Ethereum’s co-founder Vitalik Buterin says the crypto sector should not rush to appease regulators to attract speedy investment from the world of traditional finance.
“I don’t think we should be enthusiastically pursuing large institutional capital at full speed,” the Russian-born Canadian programmer wrote on Twitter.
“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.”
The comments come amid fast-growing interest from both regulators and so-called tradfi companies in the crypto world.
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Earlier in October, European Union lawmakers overwhelmingly backed the start of formal bloc-wide laws to regulate markets in crypto assets, also known as MiCA.
In the US, the Securities and Exchange Commission has taken a tough stance against the sector, arguing that many cryptocurrencies should qualify a securities, thereby placing more stringent rules on how they operate.
In the UK, the Financial Conduct Authority is quickly growing its headcount to cover the space.
Institutions are also bullish on digital assets, according to a recent survey by Fidelity’s crypto arm, which found that 74% of institutional investors intend to invest in crypto in the future, while 51% have a positive view of the asset class – up from 45% last year.
READ Why BNY Mellon is piling into crypto
The research found that 81% of institutional investors think digital assets should have a role in investment portfolios, and 43% said they would be interested in a bitcoin exchange-traded fund.
Parts of the crypto sector have been pushing for a spot ETF for some years. Grayscale, the world’s largest crypto asset manager, is suing the Securities and Exchange Commission for refusing to approve the company’s application for a bitcoin spot ETF, having already approved futures ETFs linked to crypto.
Major exchange Coinbase also backs Grayscale’s case, Grayscale said in a court filing
Buterin said he is fine with such funds taking longer to get approved, however, writing: “The ecosystem needs time to mature before we get even more attention.”
Financial News has approached the Ethereum Foundation for comment.
Buterin’s comments come after FTX chief executive Sam Bankman-Fried angered crypto enthusiasts with his own take on what regulations should look like two weeks ago.
The billionaire wrote that decentralised finance should have a “suitability test” that could restrict access to crypto, similar to qualified investor rules in traditional finance. He also said companies and websites that interact with crypto firms should have a licensing system, and that there should be a blacklist to stop sanctioned parties from using some services.
Crypto enthusiasts immediately pushed back on Bankman-Fried’s suggestions, arguing they contradict the defi principle of open access for all. Bankman-Fried rowed back on the suggestions days later.
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