Vitalik Buterin, one of the brilliant minds behind Ethereum, the second-largest cryptocurrency by market cap, recently shared his perspective on the U.S. Securities and Exchange Commission’s (SEC) recent enforcement actions in the crypto space. In particular, he addressed how the SEC’s actions have impacted projects like Solana and expressed concerns about the broader implications.

During a conversation with Matt Huang, co-founder of Paradigm, a crypto investment firm based in California, Buterin expressed empathy for projects like Solana, which have been affected by the regulatory actions. He voiced that it’s unfortunate and unjust for these projects to suffer, and he doesn’t believe that Ethereum’s success should come at the expense of other blockchains being removed from exchanges. He emphasized the importance of an honorable victory and warned that the real competition lies in the rapidly expanding centralized world that’s asserting its influence in the crypto landscape.

The current legal cases involving the SEC, Coinbase, Binance, and various crypto projects, including Solana, Cardano, Polygon, and BNB, have sparked debates over their classification as securities. This classification poses potential threats to the stability and listing of these projects on U.S.-based exchanges if they fail to comply with regulatory requirements.

The Solana Foundation, devoted to making Solana the most censorship-resistant network, has challenged the SEC’s characterization of SOL as a security. Similarly, the status of Ether, Ethereum’s native token, has been a subject of debate. While SEC chairman Gary Gensler didn’t directly address its classification in a recent congressional hearing, past statements by former SEC official William Hinman suggested that current offers and sales of Ether are not securities transactions. However, the New York attorney general’s lawsuit against Kucoin classified Ether as a security, raising further questions.

JPMorgan analyst Nikolaos Panigirtzoglou noted that the unsealing of the Hinman documents, which reveal internal discussions before his 2018 speech, could potentially sway the verdict in favor of Ether being considered a commodity, ushering in a new era of decentralization.

As the crypto industry navigates these regulatory challenges, Vitalik Buterin’s insights shed light on the complexities of the situation and the need for a fair and transparent outcome for all crypto projects involved.

Grayscale says that DeFi protocols based on smart contracts are still underestimated. Especially considering that the total market for digital on-chain transactions is much larger than the current DeFi market, worth about $200 billion. What’s more, according to the asset manager, NFT transactions and metaverse applications can contribute to a significant increase in the value of the underlying chains.

U.S. cities analogous to Blockchain protocols
The report cites a study by Dragonfly Research that referred to smart contract platforms as “digital cities.”

Ethereum was compared with New York. While this network is huge, expensive, and overcrowded in some areas, it is also the most popular and richest blockchain protocol.

With over 500 apps totaling over $100 billion – more than 10 times the size of any other competing network.

On the other hand, the Layer 2 solution built on Ethereum, Polygon, has been recognized as a skyscraper in New York City that scales up by building upwards. Polygon combines and settles multiple transactions simultaneously to reduce congestion from the underlying chain.

As for Avalanche, the report states that it is similar to Chicago. The network is “smaller, transactions are cheaper and less congested, and development is more centralized.” Its ecosystem resembles “a smaller subset of the Ethereum ecosystem.”

Solana, which operates on a different consensus mechanism, is similar to Los Angeles.

Besides, as NFT and the metaverse continue to gain popularity and attract capital, Grayscale believes that the combined market value of DeFi and metaverse applications is likely greater than the market value of cryptocurrencies of $2 trillion. The company expects smart contract platforms to also rapidly grow their user base as they act as operational layers for these applications.

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