The DAO has been created. And a few legal, regulatory and tax issues also

We have witnessed an extraordinary development end of May, when the DAO became the largest crowdfunded project in history and raised almost 170 million USD from more than 20,000 investors.

The DAO is a Decentralized Autonomous Organization – more specifically, it is a new breed of human organization never before attempted. The DAO is borne from immutable, unstoppable, and irrefutable computer code, operated entirely by its members, and fueled using ETH which creates DAO tokens.

The DAO, represented by smart contracts on the Ethereum blockchain at address 0xbb9bc244d798123fde783fcc1c72d3bb8c189413, intends to back a series of Proposals to create products or services. The DAO Token Holders will then leverage these product or services, or charge others for using them.

The DAO is self-governing and not influenced by outside forces: its software operates autonomously and its by-laws are immutably chiseled into the Ethereum blockchain. Generally, DAOs are formed by groups of like-minded individuals with specific projects and goals in mind. Its identity is formed through consensus. Its authority is defined through voluntary endorsement and, ultimately, network effects.” (


While this is a really exciting project, in my opinion it also raises a few legal, regulatory & tax questions due to its revolutionary nature. In the explanation of the DAO terms it is rightly stated:

It is very likely that specific regulations will be set in different jurisdictions targeting blockchain technology and more specifically DAOs. These regulations may or may not be DAO friendly and some might even forbid any relationships between an individual or company and a DAO.”

And with respect to tax:

No party involved with the Creation of The DAO makes any representations concerning the tax implications of the Creation of DAO tokens or the possession or use of DAO tokens. You bear the sole responsibility to determine if the Creation of DAO tokens or the potential appreciation or depreciation in the value of DAO tokens over time has tax implications for you in your home jurisdiction.”


Just a few independent authors have started to look at the legal implications of the DAO and only in the United States and the UK so far. Here is a selection of the most relevant ones:

We haven’t found any comments for other jurisdictions, in particular not in Asia.


Therefore, we would like to encourage a discussion on this topic, focusing on the following set of questions for instance:

Creation of the DAO

  1. Did the creation of the DAO violate any (national) laws for public offerings or crowdfunding projects?
  2. Does the DAO violate any national corporate laws?
  3. Does the DAO fall under a certain national jurisdiction (even if that was never intended)?
  4. Did the DAO violate any anti-money laundering or know-your-customer regulation by unconditionally accepting investors’ funds?

Legal structure

  1. Does the DAO form a company or a partnership in any jurisdiction?
  2. Can the DAO conduct any business in a lawful way without being a legal entity?
  3. Can the liability be waived to the extent stated in its terms?
  4. What role Swiss-based will play exactly?


  1. Is the liability of the DAO somehow limited?
  2. Are the DAO investors liable for any action of the DAO – exceeding the amount of their investments (joint liability)?
  3. To what extend are the creators of the DAO liable for any action of the DAO or for DAO investors losing money?
  4. What is the legal liability of the curators? Can they be sued in court for whitelisting or not whitelisting a certain proposal?
  5. Is a “contract” between the DAO and a service provider legally enforceable?
  6. Are service providers liable for any action of the DAO, as they “bridge” to the real world?
  7. Is the DAOhub team liable for anything, as it manages the DAO website?

Right of Investors

  1. How does the DAO protect the rights of its investors?
  2. How can an investor take legal action against the DAO, if there is a violation of his rights as an investor?

Data Security & Privacy

  1. Does the DAO violate any national data security or privacy laws?
  2. Who is responsible and/or liable for any misconduct?
  3. Can national authorities or regulators require the DAO to disclose the identity of its investors?
  4. What happens, if the DAO does not comply with such an order (because of the anonymity of its investors)?


  1. To what extent the DAO is subject to national tax laws?
  2. Does the DAO need a tax registration in any jurisdiction?
  3. Do corporate taxes or value added taxes apply?
  4. Are individual DAO investors liable for any tax debt of the DAO?


  1. Is it possible for the DAO to own physical assets?
  2. Can the DAO be sold to a third party?
  3. What happens, if a national authority or court orders a freeze on the DAO’s assets?
  4. What are the implications for the curators in that case, in particular if they continue to whitelist proposals leading to a pay-out?
  5. Can the DAO do business with another DAO?

[to be continued]


The DAO itself collects publications on the legal status of the DAO.

We want to encourage everybody to deal with that highly interesting topic also for jurisdictions in Asia. Please add your comments here and also at the DAO Wiki.


Source: The DAO


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