As a researcher with a background in law and blockchain technology, I find the recent report from the UK’s Law Commission on the regulation of decentralized autonomous organizations (DAOs) both intriguing and complex. Based on my understanding of the report and my life experience, I believe that regulating DAOs requires a nuanced approach that considers their diverse structures and functions.
The Law Commission of the United Kingdom has proposed in a new study that Decentralized Autonomous Organizations (DAO’s) should be subjected to current financial regulations and tax laws.
On July 11, the published research paper recommended that there’s currently no need for establishing a new regulatory body specifically for Decentralized Autonomous Organizations (DAOs). However, it advised relevant authorities to closely monitor the situation.
As a researcher exploring Decentralized Autonomous Organizations (DAOs), I’ve encountered the challenge of defining a clear-cut consensus regarding their essence. The dynamic nature of this innovative ecosystem necessitates adaptability, resulting in adjustments to its operations based on local legal frameworks.
The presence of different kinds of Decentralized Autonomous Organizations (DAOs), including pure ones, hybrids, and digital legal entities, adds complexity to the issue, as per the commission’s assessment.
The paper stated that the law that applies to a DAO would depend on the type of DAO it is.
As an analyst, I would put it this way: Some Decentralized Autonomous Organizations (DAOs) may fall under the jurisdiction of the Financial Services and Markets Act 2000 if they carry out particular functions or invest in specific assets. For example, a DAO that issues governance tokens with voting rights in exchange for investments could be considered equivalent to shares, bringing it under the purview of financial regulations.
Additionally, if these promotional items are marketed, they might fall under the UK’s advertising regulations, aimed at safeguarding consumers, the commission noted.
Meanwhile, some DAOs may be treated as unincorporated associations.
An unincorporated association is composed of people joining forces to accomplish a shared goal. In contrast to corporations, these groups don’t have a legally recognized entity independent from their members.
As a legal analyst, I would explain it this way: An association does not have the ability to independently own property, engage in contractual agreements, or face lawsuits under its own name. Consequently, any legal proceedings must target the individual members or the designated officers of the association instead.
In line with the paper’s description, members in a DAO functioning in this way would be accountable for their conduct.
The Law Commission found that a single method for governing Decentralized Autonomous Organizations (DAOs) might not be the best solution.
At the current point in the evolution of Decentralized Autonomous Organizations (DAOs) in England and Wales, it’s not advisable to create a unique legal structure specifically for DAOs, according to the paper.
Despite recognizing that a purely decentralized Decentralized Autonomous Organization (DAO) may remain vulnerable to civil and regulatory actions, the commission highlighted that the use of smart contracts, which function as binding agreements in the digital world, could be a potential point of legal intervention.
As a legal analyst, I have come across the intriguing issue of DAOs, or Decentralized Autonomous Organizations, and their legal status following the class action lawsuit against the bZx protocol in 2021. In this case, the Commodity Futures Trading Commission (CFTC) identified the bZx DAO as an unincorporated association.
In February 2022, the Parliament of the Marshall Islands granted legal status to Decentralized Autonomous Organizations (DAOs). Likewise, Wyoming took a comparable approach in recognizing DAOs as legitimate entities.
As a researcher studying the intersection of technology and finance, I’d like to share some insights about a proposed legislative initiative. Last year, Senator Elizabeth Warren declared her plans to present the Digital Asset Anti-Money Laundering Act of 2022 in the United States Senate. This bill aims to expand anti-money laundering (AML) regulations beyond traditional financial institutions to encompass decentralized autonomous organizations (DAOs).
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2024-07-12 14:47