Ethereum co-founder Vitalik Buterin says the crypto sector should not rush to appease regulators to attract quick investment from the traditional financial world.
“I don’t think we should enthusiastically pursue large institutional capital at full speed,” the Russian-born Canadian programmer wrote on Twitter.
“Regulation that leaves the crypto space free to trade 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 rapidly increasing interest from both regulators and so-called tradfi companies in the crypto world.
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Earlier in October, EU lawmakers overwhelmingly backed the start of formal bloc-wide laws to regulate crypto-asset markets, 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 as a security, thus setting stricter rules on how they operate.
In the UK, the Financial Conduct Authority is rapidly increasing its staff 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 .
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The survey found that 81% of institutional investors believe 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 a few 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, after already approving crypto-linked futures ETFs.
Major exchange Coinbase also supports Grayscale’s case, Grayscale said in a court filing
Buterin said he is fine with such funds taking longer to be approved, but wrote, “The ecosystem needs time to mature before we get even more attention.”
Financial news has reached out to the Ethereum Foundation for comment.
Buterin’s comments come after FTX CEO Sam Bankman-Fried angered crypto enthusiasts with his own view of what the regulations should look like two weeks ago.
The billionaire wrote that decentralized finance should have a “suitability test” that could limit access to crypto, similar to qualified investor rules in traditional finance. He also said that 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 against Bankman-Fried’s proposal, arguing that it contradicts the de-fi principle of open access for all. Bankman-Fried rowed back on the proposals days later.
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