With application of decentralised autonomous organisations (DAOs) in traditional organisational frameworks such as governments and businesses, researchers intend to explore the possibility to adopt DAO structure in these places, as stated by Cointelegraph. DAOs are expected to provide solutions to corruption and bureaucracy, due to their efficiency and transparency.
According to the publication, members can buy DAO tokens to participate to vote or for other governance activities. Reportedly, DAOs have entered into legal territory but the way to structural and administrative adaption is yet to happen. Various proposed procedural solutions have been proposed in recent years.
Based on data by the publication, scholars intend to explore the legal implications of autonomous legal entities and how they may solve current problems in industry, which is similar to how a DAO functions as they can exist without the need for a central authority. Research by Massachusetts Institute of Technology (MIT) stated that the law is currently inapplicable to the underlying algorithm (powered by AI) of DAOs, specific to autonomous legal entities.
Moreover, one of the problems with DAO adoption is that most states do not recognise DAOs as a legal entity. Without being legally recognised, a DAO is not required to comply with the state’s registration provisions. As a result, DAOs are not entitled to the corporate privileges available to traditional corporate entities. Concerns with DAOs are the risks associated with distributed governance and the regulatory uncertainties around it.
Despite the complications and concerns that surround DAOs, DAOs are expected to build up in their importance for legal industry. Certain proposals have been discussed to navigate the legal complications with the set up of autonomous legal entities. In comparison to legal entities, DAOs are expected to stand out with regard to operational efficiency. It is advisable to work with a team which understands the technicalities to set up a DAO and regulatory concerns around it.
(With insights from Cointelegraph)
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