- ConsenSys has come out to defend Metamask, stating that the claims about taxing cryptocurrency are untrue.
- The last statement has sent users wild as they try deciphering what it could mean. It reads; We reserve the right to withhold taxes where required.
- There is a thin air of fear in the crypto market, as many users speculate that the market is becoming more centralized by the day.
If you have tried to log in to a Metamask wallet extension in a browser, you might have noted that there is a new terms of use that you need to accept before accessing the wallet. ConsenSys, Metamask’s parent company, added the revised terms of use in April. The new manual has a section that hints at possible cryptocurrency taxation from the largest decentralized wallet.
Section four, titled “Fees and Payment”, reads in part:
4.3 Taxes. Each party will be responsible, as required under applicable law, for identifying and paying all taxes and other governmental fees and charges… imposed on that party upon or with respect to the transactions and payments under this Agreement. All fees payable by you are exclusive taxes unless otherwise noted. We reserve the right to withhold taxes where required.
The last statement has sent users wild as they try deciphering what it could mean. It reads; We reserve the right to withhold taxes where required.
Globally, governments are responsible for collecting taxes. Suppose Metamask could withhold users’ funds when they default taxes. That means they would, at that point, be working with or for the government.
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ConsenSys dispute taxation claims.
ConsenSys has come out to defend Metamask, stating that the claims about taxing cryptocurrency are untrue.
“Metamask does not collect taxes on crypto transactions, and we have not changed our terms to do so.”
They went ahead to claim that they must have been a legal misunderstanding in their terms of use. Regarding section four, tax only applies to paid plans and services Metamask offers.
“The tax section exclusively pertains to products and paid plans offered by ConsenSys. For example, Infura has credit card developer subscriptions, including sales tax.”
Metamask has come under pressure to clarify the allegation as the company thrives on decentralization and trust.
Why cryptocurrency does not sit well with governments
Governments run on centralization, and the crypto world lives on decentralization. Governments understand that embracing crypto as it is, means losing complete control over their operations. Most governments’ largest income source is taxation, and it is difficult to impose a tax on something they cannot control.
Governments are working overnight, trying to decipher how they can tax what they term the digital economy. Most countries, even in Africa, are invested in seeping centralization into cryptocurrency. Among the ways that they are doing that is through the Central Bank Digital Currencies (CBDCs), otherwise known as national digital currencies.
An example, Kenyan President Dr William Samoei Ruto is preying on the digital economy. Recently, he stated that the country would tax the digital economy, beginning with content creators. Dr Ruto has also moved over 5000 government services online and has opened up the conversation o regulating crypto instead of imposing a ban, as had earlier been hinted at by the Central Bank governor in the predecessor government.
The crypto community shoots up anytime there is the question of compromising decentralization in the most popular website.
Metamask security question
If Metamask can withhold taxes from any user wallet, a disturbing question arises, Is Metamask decentralized? If the aforementioned is possible, could they have access to users’ private keys?
Metamask popularity
Metamask’s change in terms of use has attracted so much limelight hugely due to the wallet’s popularity. To begin with, Metamask is free, and one can use it as a browser extension and as an app, either on a smartphone or PC. It is a hot wallet and is permanently connected to the internet.
The wallet has over 21 million monthly users, a 38 times increase from 2020. It connects its users to over 3700 applications and has facilitated over US$10 billion in P2P token swapping.
At the centre of Ethereum’s success has been the Metamask wallet, which supports L2 networks compatible with the second largest crypto. They include Polygon, Optimism, Avalanche and many more.
There is a thin air of fear in the crypto market, as many users speculate that the market is becoming more centralized by the day. We await to see whether the market will protect itself from the everyday encroaching government interference.
