# COALA Workshop: Model Law for DAOs (Devcon5)

- Channel: [Devcon](https://streameth.org/devcon)
- Date: 2020-10-09
- Duration: 45:11
- Topics: blockchain, smart contracts, distributed ledger, ethereum
- Watch: https://streameth.org/watch/yt-bUn1Y8Blvwc
- YouTube: https://www.youtube.com/watch?v=bUn1Y8Blvwc

## Description

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https://archive.devcon.org/archive/watch/5/coala-workshop-model-law-for-daos

The number of DAOs is growing, and yet most of these DAOs still cannot interact with legal entities, because they do not have legal personality or legal capacity. This workshop is aimed at drafting model legislation for governments to recognize DAOs as legal persons, provided that they possess specific characteristics that facilitate interaction with third parties, and that they provide minimum guarantees of soundness, oversight and accountability. 
The goal is not to create new types of corporate entities that could accommodate a DAO (c.f. the approach taken by Vermont and Malta), but rather to carve out some kind of legal recognition to DAOs that subsists in an “alegal” state (a.k.a in the blockchain world) and not in a particular geographic jurisdiction in which they would otherwise need to be incorporated.
To the extent that blockchain technology has newly endowed DAOs with both technical and economic agency (c.f. their ability to own crypto-assets and to enter into smart contract relationships), it has become crucial for national jurisdictions to recognize these new technical opportunities, and grant DAOs with some kind of legal personality and legal capacity in order to enable these technical affordances and match them with newfound legal affordances.
This work requires building a definition of who are the DAOs that should be recognized as legal persons, and what are the legal or technical requirements they should comply with to avail themselves of legal personality and legal capacity. Once this preliminary work has been done, we will work on drafting a model law for DAOs that could be adopted by a variety of national jurisdictions.


Speaker(s): Constance Choi, Anuj Das Gupta
Skill level: advanced
Track: Society and Systems
Keywords: technical

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Devcon 5 was held in Osaka, Japan on Oct 8 - 11, 2019.
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## Transcript

[Applause] it started so we planned on putting out a little questionnaire to get a sense of you know what are the most pressing legal issues that you guys see so we're gonna just do this out loud and so first one do you think your doubt is a legal ie operating how the science question yes what is the rules of nation-states because you very nice evening relations with the nation state apparatus regulation you mean legislation so state law okay thank you so so so this is a question about state the crime against the state line okay there's one of me [Music] [Music] [Music] with documents reference and contracts [Music] [Music] [Music] [Music] and so what is the legal okay can you now buy real assets and whole title through real assets so when you say down are you referring this is people who use the term a thank you many people are using to refer to the deployed contract which I disagree with because really what the Dow is it's some sort of you know it could be a new a tacit agreement it Ottoman agreement but it's some sort of pairing of an agreement with a smart contract so you have to exactly to R Anthony right so the code is augmenting the organization but it's not the same thing is that how you're using the term over so actually even we have these very long discussions on what is the definition of a Dow is contracts are contracts and in this case I think they're talking more about this kind of larger or you know there's also this problem of the Dalit will needs this series is for contracts but the idea of a Dow the project the participants obviously encompass more clear surprises yes but the organization is that brought them exactly so are talking more about the broader so then you have came by well that's where the better person let's do that right person yes that's right exactly but well person 10 or a legal person can write a few just depending on the nature of the social arrangement there may be a legal person it may be a partnership it could be an actual whole entity but it should if it exists as a little person you can buy or sort of by you know so in this case where we have two other let's say sixteen in this room with us and sort of legal rapper that people that that persona that legal personality would be the one it's getting all of the other cases it would be our judgment [Music] so but maybe but even sometimes just a group of people getting together if they don't specifically otherwise yeah I think that is the down you know people have formed if the consequence of this group of people getting together using the smart contract on the legal layer if that's a partnership then crystallize and don't recommend it because right but it doesn't depend I think the key point is just because you haven't even you don't have any more rapper doesn't mean you don't really like you might actually want my ability much more credible if your grated Parmesan mostly time they don't know themselves Georgia petition date date dude side we have you actually do contracting us back on the develop residents who are the thickness partnership itself but again if someone is in a partnership they can go out they can buy property on behalf of the partnership is mine so it's your right at a more mechanical level the way that's rationalized it's slightly different because what they're actually doing these are going out and a binding individually each partner and I agree it's a collective the phone but it still is but the net creates a trust that goes to litigation I've actually done her look less complications and this is the last thing we want to do so isn't the default legal entity also legal grammar in the south it depends depends on whose jurisdiction you a depends on West I work in the majority of jurisdictions not on its own personality it's actually Harkness persons other companies and they are the universities that prescribe to you sir this is something you've discovered actually no an ex post enforcement you know that sort of thing so in the eyes of it's legal world the person who's holding title might be individual partnership and so later you know when you're looking at what rights and duties arise from this particular group of individuals and their actions that's usually in common law jurisdictions which is English American law jurisdictions well civil law jurisdictions France Germany China Japan situation is probably different any civil I see I recently is it very similar okay it's very much on the status so I would clarify actually who asked after Germany okay so but the episode or lose the total system as well as the 74 my previous judgments ins practice that's my how about this is different it is introduces but doesn't escape sometimes we have the sweet action results just another house about this yet right now so that's the let's focus on the topic in happen you know we wanted to just ask the questions to kind of get our styles to prepare what the bigger issues are we have to look at in this workshop so I think we should discourage the next question can you kick it out all good assets to us [Music] [Music] yeah [Music] two houses and two outs of the Japanese question we do jurisdiction does not recognize for two assets and you know having a suspect legally no that's your job I mean is your towel falling or even attractive attached to any geographical jurisdiction other than the ones I mean you have to pick a wrapper that to people without a doubt with the wrapper is anyone how is it attached to every receiving members in the traditions 2007 restriction yeah Tennessee because I mean you know like this comes back to the question you mentioned earlier sometimes people [Music] yeah [Music] [Music] other chapters in all these jurisdictions that have something to say would say well no this is based on a US state jurisdiction so in a way I mean we're trying to be more practical at that level and I just invaded the concerns that exist right now I think Tommy may try to forward does any of you are jobs for I like teacher from station what is a towel providers make that their image aimless but what is your I guess I wonder what is your concept beyond it being a claim is there [Music] [Music] [Music] [Music] which is a different law is not as much as one tutorial on Sharia laws are very different and indefinite or each state that that is for example and that place in here their rules of laws and asthma trouble you are office standards that are now used as like their contracts estate the law of God the contract is governed by their office standards and arbitration is supposed to be there without actually having to having an I know between individuals to procedure you point is that yeah [Music] and that's also the nation so anyone in a browsable can you doubt rent office space listing majesty I mean of all it seems to me that most of the rest of the questions he had most of the questions and dodi just come back to whether the doubt has a bigger personality or not this is a way of saying does it have a legal battle yeah I think you know I receive a lot of experts up here it's more about like framing the I mean office space you can use tax policy for jurisdictions and they actually have thought by its diction [Music] [Music] yeah is that when you'd show people that they trust well those are but a part that everybody decide when I have liability that's a lot that's a nice neat that's a freedom for me all right it makes me freer if I can say when the legal system comes to me and you know it gets to decide that's but that's where it's sort of the choice of people represent right the reason why most public companies are corporations because they scale very easily because in clear defaults not we the role that you share that you use about right there's a net and their works much easier for people to cross nation to cut like a package deal then you can do LLC's many jurisdictions you can weave away the most wall you know responsibilities of analyses it's kind of what's the use case and I think there's really not a third lawyers your lawyers played by believe most they try they try as always saying [Music] it's not only it's also positive secure but we spoke before the courts are always probably going to be funny I mean he saw that all that [Music] so you think it should be much more it depends on the actions to be a high-level she get to be able to get away doing a when a doubt should be operation versus analysis versus life what Becca's doubts what we saw is the down strokes cries then face to face not scale if the Dow is just supposed to be like decision-making for something in turn let's say like our music or something that could turn a profit but it's not like the primary motive is a better to be proactive I got another that touches on like corporate everything's like that's one of the corners so we're gonna kind of get to the interpretation that follows should look you name we're gonna kind of talk about this but one of them is you know on one hand you have you have we have this fundamental problem of you know on one hand we have legal rules that require other structures creation you have certain governance procedures that meaning age mothers interest you need to have certain things like these are all the traditional legal requirements jurisdictional local so we are located here at home bases in some jurisdiction so these are all kind of an afterthought to the way doubts doubts work today you want treat from people without having to you know three events identify everyone have a lot of participants from all over the world you wanted to centralized governance structure or not one where you have a clearly identified CEO CEO etc so so you're seeing many different attempts to bring this decentralized space and somehow the shoe are the entities these legal boxes and because precisely where the Student Center we've got these legal boxes private legal services and protections which we also need so how do we how do we result it's do we just say okay we need to follow these little boxes and check boxes and conform to these rules do we welcome one of the thought experiments that were that we're doing that we're trying to do is figure out you know what what are these legal what are the goals behind these mechanisms these rules and how do we meet these logical contacts in such a way that we can maybe create a model law that meets these public policy goals which justifies these protections while retaining the kinds of features that we want doubts to continue so bridging that gap is it's a large depends on what Utah was supposed to do Howie Howie structure in the code as to what be the solutions you up to I mean in the legacy world right now it's great to them of having a grunting doubt and the Dow that actually was that decentralized exchanger has the controlling of operating powers matisse analyze exchange so there are differences and depends on what you want to do just it just continue on through this man [Music] sorry and the group if you consume the full group and inseparable surely you can you won't know until you get sued and deal with the uncertainty dependence examination of all of these things it's very unclear go this way go that way I think because you're juror is allowed the creation of a legal entity that like wasn't created voluntarily that does it is associated with people to be soon so they used to maybe you remember things a huge church and different groups of people creating personality of nobody's doubt in the most so and then this most cases that for example there's the goddesses imported into that toast actually written so unlike the sharing if we encourage our God is different to something we call for severity is personality resistant personality and the arnold reports tonight in the part of the rework has a different person responsible was also most universal course so that's my because you say that is one personality kind of maybe it is not a good idea no it's a great idea I think it's brilliant because I demonstrates the flexibility of legal person we're gonna get into the presentation the difference between legal personality and legal capacity which are often collapsed assumption so for example using prism they you know and his soul of absence it was very different that's how you can have personal interpersonal entities which you cannot have any agreement with conception of all or divorcing means whether the force of these yeah you can does your doubt fly with KY caml awesome identify [Music] identify meaning legal identity both first name last name social security number oh okay do you think that voting rights holders of their doubt should have mandatory voting rights holders meeting just basically like in traditional governance in order to recognize that you have this legal personality and limited liability to not pierce that veil you have to have certain kinds of procedures that protect the constants of interest between the managers the owner vice versa the shareholders one of these things is usually a mandatory meeting participate do you feel that that is also necessary lower its equivalent in the blockchain states which we are roughly charming actually I just think I noticed something needs to be other way around we pension how I Dow actually they should be actually describe policy General Assembly functions and polyneices receipts rulers are effective development and then peers of the precinct could be fun actually have some weight and if he functions informal adding a lot of members but then there's just a board member that actually creates the decision if any might actually be defective a person or if there's a whole word that takes the position and these functions like them have a seat but it's always about the members or in this case we say people who are participating in the governance sure those members whether it's the board or an entire General Assembly should it be required of dowels to require to have these kinds of regular oh yeah it depends how it affects the members if it affects me as a member and it's a decision that somebody else took then I would like them to be responsible for those decisions these are Interfax materially I think there's not effective but it's just a statement that it's just it's not even so as though as a matter of due process if you as a member are you're terribly affected you feel that you which then also means lean distinguished governance people who have movie rights to events versus but that might also include we widen that circle people also earlier in this era [Music] okay so so we're we're done with the question of our things you're going to do this week back hopefully get more but it's not dining at so so this is just an introduction to us you know a lot of us are you know participants working in different areas of the space we came together a few years ago to form a research and development community around how to create new legal frameworks how to create new kinds of culture sort of thing and so one of the projects that we've been working on we've had a variety of marketers of the year is creating precisely because of this gap between the labeling the legacy legal system works in the way this infrastructure enables new kinds of participation which might require re-plumbing on all of that we come up with this project which is without a lotta law project and both we can go go into the plan right now is to kind of go through what we see is the main issues and then if we have some time maybe take a few minutes to break out into each component of the model law and have you guys brainstorm on what we can come up with as a technological guarantee or the open because our part functional equivalent to a traditional requirements such that we can map out a continuum of things that people can do to enjoy a spectrum of legal benefits and protections that's what they make it so you know as you guys can see from the questionnaire you know we looked at why it's important to you yeah when he needs change the law because right now Dallas you know putting aside this unincorporated associations general partnerships which are then looked at after the fact that things go wrong right now we learn new solutions taking away the exceptions right now ours cannot largely otago facets and so name enter into contra contract until main sewer who are standing to sue and - and absent all of that the person who they're going to find and then when things go wrong is the nearest available Haven so right now when Dallas without a legal rapper you know think that doubts do not actually exist in the eyes of the law it's largely the law is doing so you know why is it important to solve all these problems well right now we have this unlimited liability never mind wanting limited we have an unknown and unlimited liability today for all participants in varsity various jurisdictions right and you know frankly Giles have a difficult awkward time operating legacy well there's so many of you guys action involving projects that it's been very difficult to two together just get a bacon you know when you hire employees with what with what entity you hire that employee right and you know in the case where you create some sort of legal legal wrapper and that particular in third party whether it's a person or our company contracts with that legal rapper they're still you know the legal reality that exists and then there's the block chain mail so whatever the death the Dow is supposed to be a operate by this code but you have all of this other non octane rules and procedures and powers are tiny links that are actually accessible for now operates and some restrictions have started to implement law so some kind of recognition so it's a part of the framework what we ever have noted is that what they try to do a little more things now monitor is very much turned to our usual corporations by applying like seven different parties to be intermediaries for that meditate ow it's very expensive for anyone to register at our legislation this is in the way it's part of her I would still call it a top-down imposition of a new framework creating something that is coming from the ecosystem where we actually sort of under thank you know I read a bunch of this but the given that there are you know obviously there are they think the main issue it seems like the main issue you're floating is people are getting together they're using smart contracts to clean it down and it's not clear that has legal personality wouldn't be convenient if they did have ethical personality but there are lots of current solutions for giving something right that already exists under current law lived like those partnerships like those companies corporation you know if you name it so why you know it seems like and I'm sure you have a reason for it but I'm wondering what the reasons are it seems like a dramatic step to say we need a brand new way to create limited liability at certain creating the whole personality why are the existing solutions just totally inadequate what would it would specifically so bad about that to create a new way and all the meantime until it comes up everybody's are the legal that most why don't you just use existing structures to cover it off and then instead waiting five or 10 years with this same time it is not Endor I mean there are current structures and the best structures right now I'm in the United States there various people who are not the United States [Music] two into two sections United States it's also very bad idea for example to register a field ow oh it's like a desert lies exchange or water or whatever to register [Applause] you