To create trust and minimize potential risks of scams in the development of decentralized applications (DApps), it is advisable for developers to design their backing smart contracts as immutable. This means that once deployed, these smart contracts cannot be altered. By adhering to this approach, developers can reduce their liability in cases of fraudulent activities on the platforms.
“In terms of regulations, this point is significantly significant,” Peter Van Valkenburgh, research director at Coin Center, remarked during a discussion at the 2024 Bitcoin Policy Summit held on April 9 in Washington, D.C.
To avoid potential legal issues, Bitcoin developers creating Decentralized Applications (DApps) on the blockchain’s secondary networks must make certain that immutability is incorporated into their smart contracts right from the start.
Alternatively, users enabling the smart contract to be turned on and off through a multisignature or governance vote face higher risk of being held responsible for any unlawful actions transpiring on the platform.
Van Valkenburgh also pointed out that keeping smart contracts private may not be the best choice.
“In that world, you have very hard questions of whether everybody who’s participating [is] liable for the activities of that smart contract […] I don’t see those questions having good regulatory outcomes.”
Bitcooin developers view the Ethereum system as an intriguing example of how to bypass regulatory obstacles by creating something that isn’t subject to human control, according to Van Valkenburgh.
A recently decided Uniswap lawsuit supported his argument. The judge determined that a coder is not accountable for a misuse of the created platform by a third party.
Despite the founders of Tornado Cash having been indicted, the use of immutability-ensured smart contracts does not assure developers complete immunity from legal action.
Alexey Pertsev, the creator of a cryptocurrency mixing service, was held in Dutch jail for eight months under investigation for alleged involvement in laundering funds through the employed protocol.
Roman Storm, a colleague of mine in the Tornado Cash development team, has entered not guilty pleas in the US for allegedly conspiring to manage a money transmitting business or assist in money laundering and sanctions evasion. The protocol’s other co-founder, Roman Semenov, remains at large.
Van Valkenburgh said there will be more clarity in the U.S. when Storm’s case is finalized.
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2024-04-10 04:30