Decoding Free Speech: The Debate Over Cryptocurrency Code Liability
Summary:
The cryptocurrency sector and regulatory bodies are embroiled in a debate over whether a protocol's code should be classified as free speech and, therefore, free from liability. This conversation brings with it vital questions about the potential legal responsibility of developers when their code is misused. The 1993 Bernstein vs. Department of Justice case established a precedent viewing code as free speech, protected under the First Amendment of the U.S. Constitution. However, the interpretation of this idea varies, with some advocating for regulation of the code while others push for its complete freedom from government interference. The recent aggressive actions from regulators against crypto developers may result in a chilling effect on the sector, creating uncertainty and potentially hindering innovation.
A spirited conversation is underway between supporters of the cryptocurrency world and regulatory bodies regarding the question of whether a protocol's code should count as free speech and thus, be free from liability. Regulators have routinely criticized the cryptocurrency sector for allegedly enabling illegal actions such as funds laundering and terrorist financing. Instances like the arrest of developers from cryptocurrency mixers Tornado Cash and Samurai Wallet, as well as potential regulatory action against decentralized exchange Uniswap by the United States Securities and Exchange Commission, have brought up serious questions about the potential legal responsibility of developers for misuse of their code by others.
Some interpret these developments as an attack on free speech. Nevertheless, the central question to answer is if code does equate to free speech. Or, is this definition being misused by developers wishing to avoid legal responsibility? While the cryptocurrency sector generally accepts the notion of code-as-free-speech, the real-world application and execution of this idea is much more complex.
Historically, the Bernstein vs. Department of Justice case in 1993 set a precedent for viewing code as free speech, wherein it was established that software source code is protected under the First Amendment of the U.S. Constitution. Different interpretations exist among factions, with regulators generally believing that code shouldn't receive special treatment while supporters of cryptocurrencies believe code warrants full protection from governmental regulation.
Note, however, that these two viewpoints do not cover the full scope. It is important to establish exactly where the limits of code as free speech lie and whether claims of protection from the cryptocurrency community are misguided.
The First Amendment forbids any law enforcement body from curbing the free expression of religion, press, assembly or speech. Cindy Cohn, who served as the lead attorney in the aforementioned case, views the First Amendment as a guard against the stifling of innovation, science and art, and a crucial element in safeguarding democracy. In the context of writing code, it forms a language that allows the communication of scientific ideas, with the development of blockchains and cryptocurrencies hinging largely on math and science.
There is great value in the open-source code approach, one that's common within the crypto community, as it promotes transparent and mutually beneficial contributions to code development. Yet, this in itself does not confer First Amendment protection, which is more about the developer's intent during the code creation process. If the code is crafted solely for illicit monetary gain, then free speech cannot be used as a protection.
Case-in-point is when a code could be utilized for both good and bad purposes, then the code creator can't be held liable for misuse of the same, Cohn emphasizes. However, when a project flaunts a positive use case that doesn't actually exist, the court could rule against the freedom-of-speech defense when there is evident harmful intent.
The aggressive actions of regulators against crypto developers could potentially deter open-source projects, with Tornado Cash, Samourai Wallet or Uniswap actions likely to cause a chilling effect. According to Cohn, such regulator actions are akin to penalizing a hammer for criminal misuse by someone wielding it. Laws affecting speech need to be specifically targeted to avoid undue implications, Cohn argues.
The subsequent fallout from regulatory action can extend beyond the cryptocurrency segment to other fields of academic and scientific inquiry, as evidenced in reactions to the Tornado Cash case. Additionally, instances of developers facing legal action breed uncertainty, potentially shaking investor confidence and stifling innovation, warned Bundeep Singh Rangar, a venture capitalist and CEO of digital asset firm Fineqia. It's hence crucial to revisit the precedent of Bernstein vs. Department of Justice in the context of protecting code as free speech, given the fluid nature of the law. This evaluation must include assessing if the First Amendment is being appropriately used or flouted by regulators and their modus operandi. The ongoing cases of Tornado Cash, Samourai Wallet and Uniswap will serve as a testing ground for defining the new boundaries of free speech in the realm of code.
Published At
5/21/2024 4:44:28 PM
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