(Un)Corporate Crypto-Governance

40 Pages Posted: 8 Apr 2019

See all articles by Carla Reyes

Carla Reyes

Michigan State University College of Law; Berkman Klein Center for Internet & Society at Harvard University

Date Written: February 11, 2019

Abstract

Public blockchain protocols face a serious governance crisis. Thus far, blockchain protocols have followed the path of early Internet governance. If the architects of blockchain protocols are not careful, they may suffer a similar fate — increasing governmental control, greater centralization, and decreasing privacy. As blockchain architects begin to consider better governance structures, there is a legal movement underway to impose a fiduciary framework upon open source software developers. If the movement succeeds, the consequences for open source software development could be dire. If arbitrarily imposed upon blockchain communities without consideration of variances among communities or the reality of how such communities operate, the movement may quash the technology before it ever matures. Further, in its present iteration, the argument for imposing fiduciary duties is not limited to the blockchain context and could easily be extended to other open source projects. Such open source projects have not been subject to this fiduciary responsibility scheme and yet have been an important force in industry and society for decades. Instead, this Article argues that blockchain architects should consider adopting contracts that rely upon corporate governance models for inspiration. Such a model would not obliterate the notion of fiduciary responsibilities in blockchain governance, but rather, allocate such responsibility in light of the actual mechanics of the technology. The model also enables a scheme of heightened responsibility for a greater number of actors in the ecosystem under certain circumstances. Furthermore, a contractually based governance system mirroring corporate governance paradigms would offer blockchain protocols an opportunity to adopt governance rules that reflect the unique goals and culture of the protocol and its community while appeasing the regulator’s need for a legally recognizable and responsible hierarchy. Although there will be cultural challenges to governing blockchain protocols through a corporate law model, the Article concludes that navigating such challenges is not only possible, but offers and opportunity to encourage new corporate governance structures in more traditional enterprises.

Keywords: blockchain, governance, corporate governance, contracts, private ordering, gatekeepers

Suggested Citation

Reyes, Carla, (Un)Corporate Crypto-Governance (February 11, 2019). Fordham Law Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3355026

Carla Reyes (Contact Author)

Michigan State University College of Law ( email )

318 Law College Building
East Lansing, MI 48824-1300
United States

Berkman Klein Center for Internet & Society at Harvard University ( email )

Harvard Law School
23 Everett, 2nd Floor
Cambridge, MA 02138
United States

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