Daniel Schönberger, CLO of Web3 Foundation, Zug-based nonproft behind Polkadot (DOT) and Kusama (KSM), is concerned about new EU regulation
Mr. Schönberger explains why yet another attempt to regulate Web2 and Web3 digital systems in similar manners can pose a huge threat to the technological progress of cryptocurrency protocols.
Product Liability Directive is too dangerous for blockchain, Daniel Schönberger says
In his LinkedIn post shared on Oct. 25, Mr. Schönberger took the time to discuss the prospects of the implementation of Product Liability Directive, or PLD. This document is a new element of the regulatory framework for tech products in the EU.
Simply put, this directive makes developers liable for any bugs found in their code. As such, victims of hacks, flash-loan attacks and phishing scams might be able to sue teams who contributed to the code they interacted with.
Representatives of the emerging Web3 segment have no opportunity to take part in the discussion, Mr. Schönberger stressed. Yet again, crypto protocols might fall victim to the ignorance of authorities and lawmakers.
Besides multi-million-dollar fines, developers might be targeted by litigous persons and their lawyers interested in absurdly high compensations:
Second, strict liability always shifts the procedural advantage to the claimant seeking compensation. This standard of liability is reserved generally for abnormally hazardous instances, like the conduct of a motor vehicle, the maintenance of a defective building or other structures, or the operation of a power plant.
Here’s who might benefit from poor regulation
Also, due to the unclear draft of PLD, all kinds of cryptocurrency tokens might be taxed or regulated as “data” that can lead to “years” of litigation in case of “data fraud.”
As a result, the technical development in Web3 — experimental and risky by nature — might be in danger. Ironically, “Big Tech” heavyweights would be the beneficiaries of another “anti-tech” regulation.
Mr. Schönberger certain sure that the core open-source protocols like Bitcoin (BTC), Ethereum (ETH), Polkadot (DOT) — which work as TCP/IP for Web3 — should not be regulated in this way.