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Code as law has proponents, but is proving difficult to implement A recent documentary, Code is Law, currently available on AppleTV+, Amazon Prime Video, and YouTube Movies, examines an issue and topic that is going to become increasingly important to investors and crypto advocates as institutional adoption increases. The two hacks covered in the documentary are the Ethereum DAO hack, where the first DA to gain traction while raising $160 million, suffered a severe hack. The second hacking incident covered in the documentary is the attack on Indexed Finance, with the perpetrator behind the incident – Andean Medjedovic - being framed as a symbol for the code is law movement mixed with a dash of anarchist mindset highlighted throughout. These hacks, as well as the many high-profile hacks and breaches that have caused the crypto sector billions in losses, continue to prove an obstacle to wider adoption and utilization of blockchain and on-chain assets by either individuals or institutions. Specifics of either the hacks focused on in the documentary, or more recent ones such as the Bybit incident from earlier in 2025, are unique and can vary depending on how the breach and subsequent theft actually occurs. Despite these differences, however, there are a few core concepts that will need to be reconciled before Layer 2 (as well as Layer 3), and Web3 applications will gain traction among non-crypto natives. Let’s take a look at how the rigid code as law mindset will need to evolve, and how institutions will need to embrace some attributes of the crypto-native mindset as inroads continue to be made across wide swaths of the economy. Code As Law Is Not Ready One of the underlying principles that supports the code as law slice of the crypto-native and/or cryptoasset sector is that since the coding and programming underpinning blockchain and blockchain based applications have been written and reviewed there is no logical reason to go against it. Such assumptions fall apart when many of the hacks and breaches are examined; humans can make errors in the initial writing or code, developers can stress test and deploy code incorrectly, and patches/updates can lead to errors where none existed previously. In short, mistakes can happen (and do happen) in almost every software deployment and the ability to correct and seek redress against those that exploit weaknesses is essential to wider adoption. Especially for proponents of bitcoin, crypto at large, or dollars-on-chain (stablecoins, in essence) as the future of payments the assumption that blockchain based applications are immutable and unable to be altered undermines this goal. For individuals, and even more so for institutions, the expectation and ability to reverse, correct, or otherwise undo transactions of seek redress in the case of hacks or breaches is a baseline expectation. MORE FOR YOU Code as law, and as the final/only say for transaction finality is not ready for commercial scale and realities of the marketplace. Existing Laws Still Apply Another interesting case of how the mindset that code is law can be taken to a potentially illegal and/or unethical extreme lies at the core of an ongoing legal case surrounding two brothers, Anton Peraire-Bueno and James Peraire-Bueno, and the charges they are facing. According to the prosecution in the case the two defendants (who are also brothers) executed a premediated theft that led to $25 million in losses for the investors on the other sides of these crypto trades. The defense has presented arguments that because there is no central authority on the Ethereum blockchain and no government regulations exist these actions were driven purely by economic interests. Setting aside this ongoing legal case the implications of such arguments seem to align with at least some of the code as law mindset. Since blockchain, at least in theory if less so in practice, operates as a decentralized and automated system, the intent to defraud would be nearly impossible to prove. For TradFi investors – and regulators – observing this trial, very different conclusions might be drawn from these allegations and arguments. Once again, however, if blockchain and advocates of on-chain transaction seek to increase the share of non-native crypto users that participate in on-chain activities, the ability to punish actors that allegedly exploit systemic weaknesses should be something universally agreed upon. Regulators Are Necessary Middleman A key takeaway that investors should take away from both the documentary as well as the ongoing legal battles connected to alleged code related thefts and breaches is that, at least at current, regulators and regulation are a necessary part of the crypto marketplace. Despite the opinions of blockchain purists, code as law maximalists, or other anti-regulatory sectors of the crypto landscape, relying entirely on code-based enforcement is insufficient at this point. Relying entirely on code-based enforcement with the ability to seek compensation for alleged criminal activity is a sure-fire way to continue to discourage retail and institutional investors alike from embracing cryptoassets. Investor protections, insurance for investing products and services, and the ability to contact support staff to fix problems are baseline expectations for financial services; as crypto and TradFi continue to merge together these expectations will come to crypto as well. Code as law is an idea that has some merit, but is at this time, not the basis for wider blockchain and crypto adoption. Editorial StandardsReprints & Permissions
