The emergence of blockchain technology (and other decentralized registration technologies) and its various applications has been felt in a wide range of areas of civil, commercial and financial law. One of the thorniest issues has been the response to the phenomenon of decentralized autonomous organizations (DAOs). DAOs (a non-peaceful term) constitute forms of human organization based on blockchain technology, in which several members pool funds (usually in the form of cryptoassets) to pursue a certain activity (not necessarily, but generally profitable) and whose government is largely automated and decentralized, which means that the traditional role of the management body is replaced by a mix of management by all members and automated management by a smart contract.
These new forms of organization, in their diversity, present unique challenges, but end up not operating entirely outside the law. The doctrine, national and foreign, which has already spoken out on the subject, ended up leading this form of organization back to more “primitive” societal phenomena, such as civil societies (or in collective names, depending on the legal system) in the Romano-Germanic systems or partnerships in Common Law systems. However, such qualification generally results in the absence of legal personality of these organizations and the unlimited liability of their members, an undesirable situation both for them and for third parties who use this form of organization.
Given the recent growth in the number of DAOs, it will be justified for the legislator, sooner or later, to intervene. Such an intervention will not appear easy, as DAOs present unique challenges to legal science, requiring the re-evaluation of many assumptions and models in force for decades. It will undoubtedly be one of the most relevant topics in commercial company law in the coming years, as well as one of the most interesting legal topics in the field of Fintech.
The project is divided into several phases:
(i) in the initial phase of gathering information and perspectives, we will seek to gather impressions from the industry (existing DAOs or associations) on the state of the art with regard to how DAOs organize themselves and respond to the various legal challenges of their existence, as well as receiving input from European academics and practitioners on how DAOs can be qualified in their law;
(ii) organize, based on the aforementioned interactions, a collection of studies that allows determining the status quo of DAOs in Europe, both from a transversal and a national perspective;
(iii) following the launch of said collection, organize an event with representatives or experts from jurisdictions where there is already some recognition of DAOs or similar structures (for example, Vermont, Wyoming and Malta) to understand the context and results of this recognition and regulation; and
(iv) through a conference and the publication of a final report, recommend some type of action to the European Commission with regard to the regulation of DAOs within the European Union.
All these phases will be supported by a website created especially for this purpose, which will explain the general concept of DAO and similar organizations and which will contain the project outputs.
The objective of this project is, in the initial phases already mentioned above, to draw a general framework of the legal status of these forms of organization in the law in force in various European legal systems, allowing the creation of specialized critical mass on the topic; and, at a later stage, be able, based on the information collected in the first phase, to make an important contribution to possible legislative responses to the phenomenon.
The topic has scientific relevance in that it forces us to rethink many basic principles of commercial company law (e.g., should limited liability always depend on the existence of legal personality? should limited liability always be associated with some form of delegation of powers from partners to administrators?). It is also related to the impact that smart contracts and their capital characteristic of self-execution will have on civil law and its fundamental principles.
The topic has public and practical relevance as the project aims to anticipate legislative and regulatory responses that should or could be given sooner or later. The project also seeks to provide the legislator – national and/or European – with tools for a proportionate and appropriate approach to the emergence of DAOs.