Vitalik Buterin, Ethereum's co-founder, has reiterated his concerns about cryptocurrency regulation in the US. During a discussion on Warpcast, a decentralized social media platform, he pointed out a regulatory paradox that he believes is hindering the industry's growth and integrity.

Buterin noted that the current regulatory system tends to allow projects with vague promises and unclear potential returns to operate freely. Conversely, projects offering clear information about returns and investor rights are often classified as ‘securities’ and face strict regulations.

Under SEC Chairman Gary Gensler, the US Securities and Exchange Commission has been actively pursuing lawsuits to categorize cryptocurrencies as securities. Recently, the SEC sued Consensys, claiming its MetaMask wallet's swapping and staking services violate securities laws.

The crypto industry has criticized the SEC's ‘legislation through litigation’ strategy. In April, the Blockchain Association and the Crypto Freedom Alliance of Texas accused the SEC of overreach in a lawsuit.

Buterin describes the SEC’s approach as “anarcho-tyranny,” suggesting it harms the crypto space more than either complete regulatory anarchy or strict regulatory tyranny. He argues this approach incentivizes the creation of ‘useless’ products and services.

He wrote:

“The incentive gradient that this “anarcho-tyranny” creates ends up worse for the space than either plain anarchy _or_ plain tyranny.”

Buterin advocates for a regulatory shift, proposing that issuing tokens without a clear, long-term value proposition should be riskier. Instead, projects with transparent and credible long-term plans should be protected. He believes this approach would foster genuine innovation.

To achieve this balance, Buterin calls for genuine collaboration between regulators and the crypto industry. He consistently emphasizes the need for clear and fair regulations, arguing that the current framework stifles innovation and promotes dishonesty.

His latest comments reinforce his stance, urging regulators and industry participants to engage in good-faith dialogue. Buterin believes that collaborative efforts can create a regulatory framework that supports transparency, accountability, and sustainable growth in the cryptocurrency industry.

Buterin’s call for balanced regulation highlights the need for an approach that fosters innovation while protecting investors. His insights continue to shape the ongoing debate about the future of crypto regulation.