Vitalik Buterin, co-founder of Ethereum, has said that regulatory initiatives that severely restrict the functions of cryptocurrency projects may facilitate the latter's access to institutional capital, but will negatively affect the development of the industry.
According to him, industry players should not "chase large institutional capital," as the ecosystem is not yet ready for such volumes of investment.
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Buterin has added:
"I'm actually kinda happy a lot of the ETFs are getting delayed. Basically, especially at this time, 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 Ethereum co-founder has also criticized the idea of introducing KYC procedures on the front-end of DeFi services. According to him, the step will negatively affect the user experience, but will not increase the security of the projects.
He has added:
"Hackers write custom code to interact with contracts already. Exchanges are clearly a much more sensible place to do the KYC, and that's happening already."