UK Law Commission Says No Need for New Laws for DAOs

UK Law Commission Says No Need for New Laws for DAOs

The Law Commission of England and Wales has stated that decentralized autonomous organizations (DAOs) can be covered by existing laws and therefore do not require separate legislation. In a paper published on Thursday, the Law Commission said that "where a DAO engages in activities, or issues investment arrangements, it may be classifiable as a type of financial product currently regulated by existing financial services legislation." The Law Commission also noted that governance tokens that give their holders voting rights are not conceptually different from shares, and there may also be unincorporated DAOs. Ultimately, the type of legal personality of a DAO will depend on its particular characteristics. The Law Commission's findings are significant because they provide clarity for businesses and individuals who are considering using DAOs. DAOs are a new type of organization that is typically run on a blockchain and uses smart contracts to automate decision-making. They have the potential to be used in a wide variety of applications, including fundraising, governance, and supply chain management. However, the legal status of DAOs is still unclear in many jurisdictions. The Law Commission's findings provide a clear indication that DAOs can be used in the UK without the need for new laws. This is a positive development for the growth of DAOs, as it provides businesses with the confidence to use this new technology.