Vitalik Buterin warns: “You’re at risk” because you’re “a security

Vitalik Buterin argued that if crypto returns and rights are classified as securities, the focus should be on developing tokens that either maintain or increase in economic value. He stressed that achieving this shift would require sincere collaboration between regulators and the crypto industry.

The discussion was sparked by a post from a member of the Ethereum Foundation named Jason on Warpcast, reflecting on a tweet by Buterin in 2022 during the debate on Sam Bankman-Fried’s proposed frontend regulation. Jason expressed continued belief in the value of regulations proposed by Buterin and invited him to share his current thoughts on the matter.

Jason also proposed the idea of a popup displaying the current tokenomics breakdown of a coin before a swap, along with links to Etherscan showing how top holders acquired their coins. Buterin responded, highlighting the core issue with crypto regulation in the U.S.

He pointed out that projects offering vague promises can operate freely, while those providing clear information about returns and rights often face stricter regulations as securities, which he referred to as “anarcho-tyranny.” He emphasized the need for providing a transparent long-term outlook and adhering to best practices to offer safety for crypto tokens, requiring genuine engagement from both regulators and the industry.

He referenced the SEC vs. Ripple case and the emphasis on the economic reality of transactions in applying the Howey Test.

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