Are they truly decentralised?
Are they truly autonomous?
And, what kind of organisation are they?
Crunch time is approaching for the whole DAO concept.
A crypto lawyer dissects the impact of the CFTC targeting DAOs
With reference to CFTC Files First Lawsuit Against a DAO.
“This is something which lawyers and people in the DAO community have been talking about for years now. So that's why this is just such a huge case,” said Matthew Nyman, a lawyer who works in the Banking and International Finance practice at CMS London and specializes in cryptocurrency and decentralized finance.
Nyman explained that lawyers have already been warning that DAOs could be conceived as partnerships or unincorporated associations. [...] He explained that, for an unincorporated association, each member is liable for the actions of any other member of that group — and they all have unlimited liability. Companies were created to protect individuals and reduce their liability. He asked whether this should also apply to DAOs.
“They're kind of putting the DAO in a Catch-22 situation where just because they're a DAO doesn't mean they're not subject to the jurisdiction of the CFTC. But actually, because they're a DAO, they probably can't comply and therefore there's no way for them to be compliant,” Nyman said.
Nyman added that the issue is a lack of decentralization. [...] if the regulators can find some centralized element involving people in some capacity, they will try to find a way of holding those people liable.
This is serious. Nyman has concerns as to whether the people behind Ooki DAO have the funds to contest the CFTC lawsuit; the concern is that caving to the CFTC would set an unwanted, and potentially unfair, precedent.
The stated solutions are, either to set up a legal structure within friendly jurisdictions, or to maintain anonymity and go further underground.
Worth looking back to how this DAO concept started, when Stan Larimer called them DACs (Distributed Autonomous Corporations). Bitcoin and the Three Laws of Robotics was written in 2013. This interview, from 2017, also sheds some light on Stan's insights from unmanned flights and motivations to create fully autonomous corporations.
But Asimov's Three Laws of Robotics have numerous loopholes and unintended consequences. And, similarly, DAOs, and any other allegedly "decentralised" structures need to move on from their naive first-iteration rule-sets and explore ways of overcoming the fairly obvious consequences of re-centralisation and malicious takeovers. However, to do this they also need some kind of legal sandbox in which to explore new algorithms in real-time and in public.