Ethereum’s outspoken co-founder Vitalik Buterin recently expressed his frustration over the current state of cryptocurrency regulation and offered up a surefire solution to the problem.

Responding to a user on Warpcast, a social media platform built on the Farcaster protocol, Buterin described a situation where current regulatory efforts have essentially painted good-faith cryptocurrency developers into a corner:

Anarchy

On the anarchy side of things, there appears to be no end to the glut of bad actors, scammers and baseless hypesters proliferating on social media and sharing platforms.

Buterin previously made three recommendations that purported to solve the problem of “useless” cryptocurrency products and services: limiting leverage, requiring audits and transparency, and gating usage with knowledge tests.

While it’s unclear how cryptocurrency knowledge tests could be implemented at a regulatory level or administered at the individual or corporate level, it would likely be a matter of policy to place limits on cryptocurrency project leverage and institute auditing and transparency reporting requirements.

Tyranny

Unfortunately, the cryptocurrency community's sentiment seems to be that the United States has both an outsized number of cryptocurrency users and an approach to cryptocurrency regulation that could best be described as nebulous or uneven.

Buterin said that rather than offer the most protections to companies and projects without a long-term vision or plan, he would “much rather see us move to the opposite situation, where issuing a token without giving a clear long-term story for why it will maintain or increase in economic value is the riskier thing.”

However, Buterin also alluded that implementing regulations that serve the cryptocurrency industry is only part of the battle:

“Actually getting to this will require good-faith engagement, both from regulators and from industry.”

Related: Vitalik Buterin endorses TiTok AI for onchain image storage