Developers advised to ensure code immutability to avoid potential legal consequences, says policy executive.

Developers creating decentralized applications (DApps) must ensure that the smart contracts supporting them cannot be altered, as this will reduce their liability for any fraudulent activities that occur on the platforms, according to a policy executive. Peter Van Valkenburgh, research director at Coin Center, emphasized the importance of immutability in smart contracts during a panel discussion at the 2024 Bitcoin Policy Summit in Washington, D.C. He warned that Bitcoin developers who wish to build DApps on layer 2 networks must prioritize immutability to avoid legal consequences. Conversely, developers who allow the smart contracts to be altered through a multisignature mechanism or governance vote will face greater liability if illegal activities occur. Van Valkenburgh also advised against keeping the smart contracts closed-source. He cited the Ethereum ecosystem as an example of how to avoid regulatory obstacles by creating a system that is not controlled by any individual. He highlighted the recent dismissal of the Uniswap lawsuit as evidence that those who write computer code should not be held responsible for the misuse of their platforms by others. However, the indictment of the founding developers of Tornado Cash demonstrates that immutability-enforced contracts do not guarantee freedom from prosecution. One of the developers, Alexey Pertsev, spent eight months in jail in the Netherlands on suspicion of involvement in money laundering. Another developer, Roman Storm, has pleaded not guilty to charges related to money laundering and sanctions evasion in the United States. The case against Storm will provide more clarity on the legal implications for developers. The race to create safe and legal coin mixers, such as Tornado Cash 2.0, highlights the need for developers to prioritize both safety and compliance.