A Path to An Alternative Regulatory Solution for Decentralized Autonomous Organizations in the Cryptocurrency Arena

September.24.2021

As legal departments confront tighter government regulation of cryptocurrency projects, Joon Kim, General Counsel of the Mina Foundation, and Orrick partner Daniel Forester collaborated on this article that provides practical guidance for creating Decentralized Autonomous Organizations (DAOs).  DAOs can serve as a regulatory alternative to forming a corporate entity, with many cryptocurrency projects planning to launch as, or convert into, DAOs.

The article discusses regulatory obstacles associated with DAOs, which vary by jurisdiction in terms of legal status and can present several legal and operational complexities. The article also provides a roadmap to what DAOs can or cannot do, including whether a DAO can enter into a contract or have legal rights.

“The stronger the push to fit cryptocurrency projects into the existing corporate structure, the stronger the pushback will be from the cryptocurrency community,” the article concludes. “Rather than focusing solely on how to fit a DAO into the existing regulatory frameworks, sophisticated projects can identify and address legal and operational limitations of entity-less DAOs to achieve permissionless access, decentralization, and democratic governance.”