Policy Expert Advises Developers: Implement Immutable Code to Mitigate Legal Risks

Peter Van Valkenburgh of Coin Center urges developers working on decentralized applications (DApps) to prioritize immutability in their smart contracts to mitigate potential legal liabilities stemming from illicit activities on their platforms.

Speaking at the 2024 Bitcoin Policy Summit in Washington, D.C., Van Valkenburgh emphasized the importance of ensuring that smart contracts cannot be altered once deployed. He cautioned developers, especially those working on Bitcoin layer-2 networks, against the risks of facing legal consequences if their platforms are used for unlawful purposes.

Van Valkenburgh warned that smart contracts allowing for modifications through multisignature mechanisms or governance votes increase the likelihood of developers being held accountable for illicit activities occurring on their platforms.

Moreover, he advised against keeping smart contract code closed-source, as it could raise questions about the liability of all participants involved in the platform’s activities, leading to uncertain regulatory outcomes.

Highlighting Ethereum as a notable example, Van Valkenburgh praised its decentralized nature, which helps developers circumvent regulatory obstacles by minimizing human discretion. He cited the recent dismissal of a lawsuit against Uniswap, where the court ruled that code developers should not be held responsible for third-party misuse of their platforms.

However, Van Valkenburgh acknowledged that even with immutable smart contracts, developers may not be entirely immune from legal scrutiny. He referenced the case of Tornado Cash, where one of the developers faced imprisonment on suspicions of involvement in money laundering activities.

Despite such challenges, Van Valkenburgh believes that the resolution of ongoing legal cases, like that of Tornado Cash developer Roman Storm, will provide further clarity on regulatory matters concerning decentralized platforms.