Challenges in the Legal Qualification of Decentralised Autonomous Organisations (DAOs): The Rise of the Crypto-Partnership?

Abstract

This paper attempts to provide a cross-jurisdictional analysis of the legal qualification of decentralised autonomous organisations (or DAOs). Having been described as 'crypto-companies', they are entities existing solely on computer code and within a given blockchain, having relatively autonomous and self-sufficient corporate governance mechanisms, and whose core members - the tokenholders - exercise a great degree of control thereover, providing the DAO with funding in cryptocurrency, with the combined assets used to fund projects and distributing earnings among the tokenholders. Made well-known through an ill-fated experience in 2016 which involved the hacking of USD 50 million, DAOs present enormous challenges to lawyers, scholars and regulators - what to make of this eerily-abstract entity? It exists in no physical location, it produces nothing and is essentially a nexus of pieces of code (called smart contracts) banded together but conceived as an organisation.

Keywords: decentralised autonomous organisations, decentralized autonomous organizations, DAOs, blockchain, companies, partnerships, smart contracts

JEL Classification: K20, K22