Law Commission seeks views on blockchain-based DAO structures
The Law Commission of England and Wales has called for evidence about blockchain-based decentralised autonomous organisation (DAO) structures.
DAOs are a form of organisational structure that links its participants digitally with blockchain technologies, such as the smart contract.
While DAOs are similar to existing organisations, like general partnerships, they rely on decentralised power structures protected by agreements made through unchangeable, autonomously run code. DAOs are typically run on open-source blockchain systems.
A common example of a DAO is a group set up to jointly invest in or trade cryptoassets, although they can be used for a wide variety of purposes.
The Law Commission has noted the legal ambiguity in the organisational structure and is therefore seeking evidence from experts to better understand the technology and better advise government policy regarding it.
“DAOs are said to offer multiple benefits to market participants, incentivising cooperation and innovation, levelling playing fields, reducing the scope for human error, lowering costs, and increasing transparency. Yet their legal and regulatory status is unclear,” said Prof Sarah Green, law commissioner for commercial and common law.
“Our work will aim to build consensus on the best ways of describing the constituent elements of DAOs and to highlight ways in which the law of England and Wales might foster their development.”
The call for evidence is open for 10 weeks, concluding on 25 January 2023.