DAO Regulation Roundtable
A who's who of Australian crypto and blockchain talent assembled this week at the invitation of Senator Andrew Bragg, to discuss how a company DAO could be regulated under Australian law. With Senator Hume's office represented at the meeting as well, the most active Australian politicians are actively engaged in bringing the Aussie regulatory space into alignment with this exciting new technology.
Senator Bragg chaired the recent Senate Select Inquiry into Australia as a Technology and Financial Centre and Recommendation 4 in the Final Report was:
The committee recommends that the Australian Government establish a new Decentralised Autonomous Organisation company structure.
We have commented on that Recommendation, which was adopted by the Treasurer in December 2021 and which has been the subject of comment from the Chairman of ASIC and work is now underway to implement and establish a framework.
The group had a wide ranging discussion and some guiding principles emerged which will be further refined over the coming weeks and may inform the shape of regulation / policy. Those principles included:
The urgent need for Australia to give DAOs legal status so they can enter into contracts and participants can have certainty about their dealings and treatment, with the possibility of licensing and insurance and property ownership tied to legal personhood;
Considering a light touch DAO framework but leaving out of that framework DAOs which are purely code launched without voting governance at the code level (exclude capture of public blockchains like Bitcoin which are 'governed' by miners and nodes);
Conditions attaching to legal personhood, but the need to keep that flexible so as not to become rapidly outdated;
The need to consider retail consumer protection, but also not to lose sight of the benefits of innovation from the fear of consumer risks given consumers can access blockchain systems and tokens offshore in any event;
That the current forms of director duties and fiduciary duties owed to shareholders don't reflect the DAO model (at least on public blockchains) where the lack of transparency in a company is not a feature in DAOs;
That any law will need transitional and retrospective effect to ensure a smooth transition;
That the benefit of legal recognition under Australian law will likely need some standards, such as plain English audit and explanation of code and governance within a DAO so participants don't need to be code-literate to understand a DAO they are joining;
But, conditions of legal recognition cannot require identification of DAO participants in the way shareholders are published in a database now, and that collection of personal information from members or those elected or fulfilling decision making roles needs further consideration; and
That DAOs should be treated as a flow through entity for tax purposes, that is the holders of tokens should be the parties subject to tax. The corporate tax base in Australia is eroding and DAOs may benefit from an automation of tax collection.
Attendees at the Roundtable included such amazing individuals as:
Senator Andrew Bragg
Amelia Hamer, Financial Services Policy Lead Adviser to Senator Jane Hume, Minister for Women's Economic Security, Minister for Superannuation, Financial Services and the Digital Economy.
Joni Pirovich of BADASL
Hannah Glass of KWM
Natasha Blycha of Stirling & Rose
Susannah Wilkinson from Digital Commerce Committee, Law Council of Australia
Mark Bland of Mills Oakley
Ass Prof Chris Berg and Dr Aaron Lane of RMIT Blockchain Innovation Hub
Scott Chamberlin of ANU
Martin Gray of Afterpay
Michael Harris and Ryan Parsons of Swyftx;
Pat McNab from Mycelium Ventures; and
Please note that any errors in the above summary are my own.