MetaMask Terms of Use Update Confuses Community; Can it ‘Withhold’ Tax?

1inch co-founder Anton Bukov recently brought up issues surrounding the revised tax-related terms of service for the MetaMask cryptocurrency wallet.

The executive took to Twitter to outline a section that discusses the parties’ responsibility around taxes. It includes the identification, payment, and the right to withhold taxes if necessary per the law.

MetaMask Users Confused on Tax Responsibilities

The ConsenSys-provided Terms of Use of MetaMask, which describe the guidelines for using its services, were modified in April 2023.

The terms define user obligations, applicable laws of usage, the services offered, and MetaMask’s right to change the terms or discontinue its offerings at any time.

Bukov was especially intrigued by section 4.3 regarding taxes. This section states that identifying and meeting any tax and other government-imposed obligations is the user’s and MetaMask’s joint responsibility.

The wallet provider also notes any fees payable to MetaMask do not include taxes barring any express mention. Meanwhile, the user is responsible for paying applicable taxes and service fees.

However, the section also underlines, “All fees payable by you are exclusive taxes unless otherwise noted. We reserve the right to withhold taxes where required.”

Can MetaMask ‘Withhold’ Tax?

For a common user, the term translates that MetaMask reserves the right to withhold taxes if required by law. But, users were quick to question that, given its popularity as a decentralized wallet and a non-custodial trading platform. MetaMask offers digital asset management through a browser extension and its mobile app. Browser compatibility for non-fungible tokens (NFTs) was a recent addition to the services offered by MetaMask.

Since the DEX algorithm is entirely automated and operates across jurisdictions, the onus of paying applicable taxes remains on the investor.

However, MetaMask specifies that the wallet provider may withhold the appropriate taxes from the payments or transactions if relevant authorities enforce particular tax withholding responsibilities.

However, the word could apply to multiple ConsenSys products, as pointed out by a Twitter user. It includes the product suite of Infura, Quorum, Codefi, Truffle, and Diligence in addition to the wallet, and it might also effectively mean sales tax.

Last month, ConsenSys, the company behind MetaMask, also reported a data breach.

It noted that between August 2021 and February 2023, ConsenSys’s third-party customer service provider experienced the breach. This breach potentially exposed the personal information of MetaMask users who contacted customer service and shared their personal details, for which it received major flak.

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