24 Feb INATBA Publishes Policy Notes on Decentralised Autonomous Organisations (Part 2 of 4)
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INATBA is the global convener of the blockchain ecosystem, with 170+ members dedicated to promoting global adoption of blockchain and DLT technologies by bridging the gap between policymakers and industry stakeholders for mutually beneficial conversations. INATBA has 6 Working Groups, each dedicated to a specific niche within Blockchain. The Finance Working Group is set up to leverage member expertise and knowledge of DLT-based finance issues for development into policy recommendations.
INATBA and its members have, through these Working Groups, reviewed and responded to numerous regulatory proposals, including the European Commission’s Markets in Crypto-Assets regulation (MiCA). MiCA aims to provide legal certainty on the treatment of crypto-assets and crypto-asset service providers in the European Union (EU). The industry is uniquely fast-paced and rapidly evolving and, as such, demands an evolution in knowledge sharing and regulatory approaches.
INATBA’s members have produced this series of four papers to help share knowledge and encourage establishing a new form of a regulatory sandbox to develop modern, appropriate and sustainable regulatory approaches for this unique industry. The series of papers has four parts;
- Paper 1 on Decentralised Finance (DeFi),
- Paper 2 on Decentralised Autonomous Organisations (DAOs) – the one you are about to download now;
- Paper 3 on Non-Fungible Tokens (NFTs), and
- Paper 4 is a call to establish a new form of regulatory sandbox.
Together, these papers explore the fluid interchangeability of the technologies and explain how the full potential of these applications may exceed the initial scopes anticipated by policymakers. The Finance Working Group of INATBA has produced these papers by its members and for the ecosystem. The first paper, focusing on Decentralised Finance, can be found here.
The second paper, which you can find here, focuses on Decentralised Autonomous Organisations. Decentralised Autonomous Organisations, more commonly known as DAOs, are the preferred governance method of DeFi and other permissionless organisations. DAOs are a key innovation that facilitate community organising, monetising and managing and will most likely play an increasingly important role in the economy.
However, as the paper discusses, DAOs face some important hurdles; firstly, the lack of a legal DAO definition and, secondly, lack of clear guidelines on how an organisation can transform from a centralised form to a compliant Decentralised Autonomous Organisation. Furthermore, the document considers both the regulatory and the liability issues faced by DAOs. In short, current incorporation methods (or lack thereof) result in increasing liability of DAO participants, and clear guidance on how these organisations can incorporate and provide a liability shelter if needed. This is an additional issue that plays into the current unclear and unrealistic incorporation requirements placed upon Decentralised Protocols. Lastly, the DAO section proposes a legal definition for a DAO, which welcomes feedback from the industry.
To join our work on this topic, please email us at firstname.lastname@example.org.
Report co-authors: Alireza Siadat (Annerton), Axel von Goldbeck (DWF Law), Dimitrios Psarrakis (XReg Consulting), Donna Redel (Fordham University), Guido Schmitz-Krummacher (Lisk Foundation), Ismael Arribas (KUNFUD), Jan Klesla (Blockchain Republic Institute), Jean-Christophe Mathonet (FeenPOP), Joshua Ellul (Malta Digital Innovation Authority), Lorena Stanescu (Stanescu and Partners), Merav Ozair (Rutgers Business School), Nathan Vandy (Blockchain Helix), Nina-Luisa Siedler (DWF Law), Synthia Bastron (Lisk Foundation), Tom Jansson (IOTA Foundation).
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