ConsenSys, the organization behind the widely-used MetaMask crypto wallet, has promptly addressed and refuted claims suggesting that it imposes taxes on its users.
Through a tweet on Saturday, the company sought to dispel these rumors, attributing them to “inaccurate information” which seemingly arose from a misinterpretation of MetaMask’s terms of service. The company emphatically stated: “Let’s clarify one thing upfront: MetaMask does NOT collect taxes on crypto transactions and we have not made any changes to our terms to do so.” They went on to label the assertion as “false.”
The root of the confusion appears to be a circulated screenshot from MetaMask’s terms and conditions. This image highlighted a clause where the company stated it retains “the right to withhold taxes where required.” However, ConsenSys clarified that this does not translate to the collection of taxes from user transactions.
The blockchain firm clarified that the mentioned section pertains solely to ConsenSys’ products and paid offerings, like the developer subscriptions via Infura that incorporate sales tax.
“While legal jargon can be intricate, it’s essential to underscore that this clause doesn’t pertain to MetaMask or any other offerings devoid of sales tax,” the firm emphasized.
“MetaMask hasn’t levied taxes on crypto transactions, nor have we updated our terms to do so.”
The inaccurate information quickly gained traction after appearing on the r/CryptoCurrency subreddit, accumulating over 500 upvotes and sparking 600 discussions.
Several prominent figures in the crypto space amplified the news, inadvertently perpetuating the false narrative.
Community apprehension arose when ConsenSys implemented several contentious alterations to its privacy terms.
In November, the firm disclosed its intention to gather specific data users provide. This includes identifying details like names, usernames, genders, dates of birth, and more. They also indicated collecting profile credentials, contact details, financial data, and transaction specifics.
Additionally, ConsenSys mentioned that its other offering, Infura, would begin logging users’ IP addresses every time a transaction was initiated.
This revelation was met with skepticism from the crypto community, many of whom voiced concerns about potential intrusions into their on-chain privacy.
In response to the community’s feedback, ConsenSys stated in a later announcement, “The update sparked numerous public and internal discussions, emphasizing the need to bolster the privacy of MetaMask and Infura users.”
Paying heed to the concerns, the company amended its data retention policies, capping the storage duration for details like wallet and IP addresses to a week.
Crypto Traders Are Expected to Pay More Taxes
Although MetaMask has clarified its stance on not imposing taxes on users, the landscape seems to be shifting for crypto traders, with indications of heightened tax obligations.
Recent reports highlight US President Joe Biden’s reluctance to sign any debt ceiling agreement that appears to favor cryptocurrency traders.
In a pointed statement, Biden mentioned, “I’m not going to agree to a deal that protects wealth tax cheats and crypto traders while putting food assistance at risk for nearly 1 million Americans.”
The “protections” for cryptocurrency enthusiasts that President Biden alludes to involve tax-loss harvesting. This tax optimization tactic entails the selling of cryptocurrencies that have depreciated in value. By doing this, investors can counterbalance capital gains taxes incurred on other profitable investments.
