US Congressman Seeks To “Reverse” Transactions

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The US Congressional Blockchain Caucus is apparently seeking to reverse blockchain in the case of criminal behavior. It is unclear how these plans are supposed to be implemented. 

Bill Foster drives “Crypto Purists Berserk”

Congressman Bill Foster (D) unveiled these plans during an online event for news outlet Axios. According to the Illinois representative, the US needs to introduce a regulatory framework that makes it possible to unmask the identity of crypto wallet holders involved in criminal activities and to reverse fraudulent transactions:

Is there a court that you can go to unmask the participants, but also is there a trusted third party or court that you can go to, to reverse fraudulent or mistaken transactions?

The 65-year-old, who is the co-chairman of the Congressional Blockchain Caucus, added that his announcement “will drive the crypto purists berserk”. Instead, many were left puzzled about how the congressman apparently believes permissionless blockchains to work. Is he expecting miners and validators to conduct a hard fork anytime the US government requests a transaction to be reversed?

Are Transaction Reversals even possible?

Despite blockchains being typically described as immutable ledgers are widely believed, transaction reversals have happened before, albeit only on exceptional occasions. 

For example, EOS has reportedly reversed fraudulent transactions in the past, which was made possible due to their unique approach to the delegated Proof of Stake consensus mechanism. In this case, all delegated node operators agreed to carry out the reversal, although the move was met with widespread criticism among the crypto community. 

As a centralized stablecoin, Tether boasts itself of being able to “undo” transactions that inadvertently went to a wrong address, if this led to funds being permanently frozen. For instance, this often happens when users send a transaction to a DeFi smart contract wallet instead of using the platform’s web interface. In this case, the affected users can submit a proof that their funds have been burned to Tether and have their USDT tokens replaced. 

The most infamous example of a transaction reversal is of course the DAO hack of 2016, after which the Ethereum Foundation initiated a hard fork to reclaim the stolen funds. However, while most miners agreed to activate the hard fork, some objected to this move, which led to a chain split and the creation of Ethereum Classic.

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