US crypto regulation bill aims to bring greater clarity to DAOs
Categories: Crypto News US
US crypto regulation bill aims to bring greater clarity to DAOs
On June 7, United States Senators Cynthia Loomis and Kirsten Gillibrand launched the much-anticipated Responsible Financial Innovation Act, proposing a comprehensive set of rules that address some of the biggest questions facing the digital asset sector. By providing holistic guidance to the fast-growing industry, the bill provides a bipartisan response to President Biden's call for a thorough government approach to regulating crypto.
The Bill is perhaps most productively seen as an invitation to further negotiations. In the coming months, its success or failure will be largely determined by the strength of the debates arising from it. It has already received a strong response from the industry. One of the most hotly debated – and potentially influential – sections of the law pertains to decentralized autonomous organizations (DAOs).
While this act clearly spells out elements of DAO policy, further action is needed to answer remaining questions about the legal status, applicable laws, and jurisdiction. DAOs are entities that use blockchain, digital assets, and related technologies to allocate resources, manage activities, and make decisions.
By making operational and financial information publicly viewable and empowering members to suggest, vote and confirm changes directly across organizations, DAOs provide a way to decentralize the operations of firms. The pioneering Responsible Financial Innovation Act will address fundamental questions of DAO policy, including defining DAOs, establishing incentives for incorporation, and bringing them into the tax code.
For example, the U.S. In the U.S., the DAO faces a Byzantine legislative landscape defined by several competing state-level structures. While these legislative approaches may create optionality for DAOs, they also present a compliance barrier, and many have faced criticism for their shortcomings.Without a clear legal position, DAOs face operational limitations, cannot pay taxes and put members at risk of unlimited liability.
For the DAO, it has begun to address a number of questions that builders have been grappling with for years. But for the senators' vision to materialize, DAO policy, among other issues, must contend and, ultimately, be meaningfully advanced. It is now up to industry leaders, policy makers and others in the ecosystem to work collaboratively to develop the effective fit-for-purpose policy needed for this nascent organizational structure to flourish.