In-depth interpretation of ConsenSys letter to the US Treasury

This article comes fromconsensys, Odaily translator | Moni

This article comes from

, Odaily translator | Moni

The letter mentions that a decentralized network like Ethereum, the largest programmable blockchain in the world, leads the way in terms of developer community, user activity, and business adoption, enabling unprecedented innovation and achievement. On this trusted open source foundation, people around the world are building the digital economies and online communities of the future. Consensys' software suite, consisting of MetaMask, Infura, Quorum, Truffle, Codefi and Diligence, is used by millions and supports billions of blockchain calls, enabling developers, businesses and users around the world to build next-generation applications programs, launch modern financial infrastructure and access the decentralized web.

The following is the main content of this letter:

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1. Blockchain is a “programming platform”

MetaMask is widely recognized as the most popular Ethereum self-hosted wallet in the world, but few people realize that it is both a developer platform and a client-side key management solution. ConsenSys isn't the only company working to improve developer engagement and productivity, examples abound of a thriving developer ecosystem where bright minds from around the world are solving new problems created by emerging technologies.

From this perspective, the U.S. Treasury Department should consider regulatory issues surrounding blockchain protocols. While there has thus far been much focus, regulatory or otherwise, on dollar-denominated digital token prices and the speculation that often accompanies secondary market transactions, this will only happen when the technical capabilities of emerging blockchain networks are perfected. Achieve sound governance.

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• 2. Blockchain network and related software risks

There are certain risks associated with blockchain software (on-chain code and off-chain tools) and participation in the blockchain ecosystem, and Consensys offers some advice on how to mitigate these risks, as follows:

• Phishing: MetaMask users are targeted by social media and phishers via email, scammers trick users into sharing their wallet passwords, which only the user can have and protect. Currently, about 80% of all customer complaints that MetaMask receives through its customer support channels are users reporting phishers. Social media platforms such as Twitter are also "hardest hit" for fraudulent activities. Words conjure images of bots trying to trick users into wallet keys, and these social media platforms are not doing anything effective to reduce fraudulent activity.

Solutions – first, social media that feeds fraudsters should devote more time and effort to rooting out such behavior; second, regulators and law enforcement can work more closely together to report, investigate, and disrupt organized fraud Great phishing scam. Third, the blockchain ecosystem should create tools to combat online fraud.

• Hackers and Bugs: One risk of on-chain software (that is, smart contracts) is that it will be hacked by malicious attackers, and there are also potential bugs that lead to loss of user funds.

Malicious Smart Contracts: Some programmable blockchain protocol users do not understand that when they interact with a smart contract the software is usually granted approval to send tokens in their wallets to other addresses, which is a risk for users , because while some contracts require users to grant strictly tailored approvals to take advantage of its functionality, some smart contracts require broad approvals, including control of all tokens in a wallet for any purpose.

Solution - Blockchain developers are currently working on solving this problem from an industry best practice perspective. On the one hand, MetaMask is considering solutions that could be integrated into the MetaMask interface to warn users when smart contracts require unlimited approval for their wallets. Second, users familiar with the functions of smart contracts and their dangers will also reduce this risk, and law enforcement agencies also need to understand the risky interactions of on-chain software.

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3. Legislative and Regulatory ProposalsConsensys offers four proposals for encryption-related legislation and regulation:

First, it proposes to amend the federal tax code to exempt small cryptocurrency transactions from taxation.Relevant tax laws have become a barrier to the everyday use of cryptocurrencies in business transactions and other micropayments. The recent bills introduced by Senators Toomey and Sinema hope to constructively address this issue, and we encourage the U.S. Treasury Department to support these initiatives.

Second, protocol rewards for validating blocks on a PoS network should not be considered taxable income.This is an especially important question given Ethereum's migration to PoS and the continued growth of other PoS programmable blockchain networks. Without this solution, millions of ordinary Americans may find it difficult to comply with their federal tax obligations in the near future, largely through no fault of their own. The U.S. Treasury Department should provide guidance, and the IRS should provide such treatment under existing laws.

Third, FinCEN’s proposed reporting rules for non-custodial wallets would impose greater reporting responsibilities or monitoring burdens on wallet users, and the U.S. Treasury Department should refrain from finalizing any rules designed to restrict non-custodial digital asset wallets or otherwise lawful uses .Consensys respectfully recommends that the U.S. Department of the Treasury push for regulatory updates to correct the de minimis exemption constraints for digital assets, and supports the legislative process to correct related policy deficiencies.

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