{"id":428916,"date":"2022-04-09T08:12:00","date_gmt":"2022-04-09T05:12:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/dao-regulation-in-australia-issues-and-solutions-part-2\/"},"modified":"2022-04-09T08:12:00","modified_gmt":"2022-04-09T05:12:00","slug":"dao-regulation-in-australia-issues-and-solutions-part-2","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/dao-regulation-in-australia-issues-and-solutions-part-2\/","title":{"rendered":"# DAO regulation in Australia: Issues and solutions, Part 2"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a27805a269bf\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a27805a269bf\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/dao-regulation-in-australia-issues-and-solutions-part-2\/#%E2%80%9D_DAO_regulation_in_Australia_Issues_and_solutions_Part_2_%E2%80%9C\" >&#8221; DAO regulation in Australia: Issues and solutions, Part 2 &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/dao-regulation-in-australia-issues-and-solutions-part-2\/#Which_blockchain_and_the_role_of_regulation\" >Which blockchain and the role of regulation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/dao-regulation-in-australia-issues-and-solutions-part-2\/#Compliance\" >Compliance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/dao-regulation-in-australia-issues-and-solutions-part-2\/#Replaceable_rules\" >Replaceable rules<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_DAO_regulation_in_Australia_Issues_and_solutions_Part_2_%E2%80%9C\"><\/span>&#8221; DAO regulation in Australia: Issues and solutions, Part 2 &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-2a0745c6><em>Lawmakers in Australia want to regulate decentralized autonomous organizations (DAO). In this three-part <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/watch-movies-tv-seriess\/\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Watch Movies &amp; TV Series\" target=\"_blank\" rel=\"noopener\">series<\/a>, Oleksii Konashevych discusses the risks of stifling the emerging phenomenon of DAOs and possible solutions.<\/em><\/p>\n<p>Regulating a decentralized autonomous organization (DAO) as a company, first of all, means registration as a company. But who remembers why we need that registry in the first place? Will anyone question whether a blockchain-based DAO needs registration at all?<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-04\/78e03d45-0713-46b1-8c4b-133eadc274c6.png\"><\/figure>\n<p>Historically, the government took the role of that trusted third party that, through its public agency \u2014 i.e., a registry office \u2014 keeps records about a company: who is in charge, its address, its constitution, shares and shareholders, and so on. In any legal issue or dispute, the registrar will take the registry as the source of truth. Registration can be canceled if a company does illegal business. Registration is also needed for taxation. The public registry body keeps this data, ensuring its authenticity and safety.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>DAO regulation in Australia: Issues and solutions, Part 1<\/em><\/strong><\/p>\n<p>Nowadays, the registry is electronic and needs reliable infrastructure: software and data centers, cybersecurity measures, etc. Besides, there are formal rules and requirements for the registration. So, each record is verified against these rules. All of this is the responsibility of the registry office.<\/p>\n<p>Now let\u2019s see what a blockchain is. This <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> can ensure an unprecedented level of protection for electronic records. Once a record is published on a reliable blockchain, there is no way to tamper with it. Besides, users publish and manage their data on a blockchain without an inter<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>ry.<\/p>\n<p>So with blockchains, at least two functions of the registry office become redundant:<\/p>\n<p>\u25cf The registrar does not need to make records \u2014 users can do it themselves.<\/p>\n<p>\u25cf The registrar does not need to maintain the registry infrastructure.<\/p>\n<p>And this can be the most concerning part for bureaucrats and retrogrades. No one is precisely responsible for maintaining the ledger infrastructure. It is an open, self-organized and self-governing network with no authority. Even after 14 years of successful work, people still do not believe and accept that this is h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ening.<\/p>\n<p>We don\u2019t need any conventional registry for a DAO registration because the blockchain is the registry itself.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Decentralization, DAOs and the current Web3 concerns<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Which_blockchain_and_the_role_of_regulation\"><\/span>Which blockchain and the role of regulation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>I should say that not every blockchain is reliable. And here comes the role of the government in terms of regulation. First of all, private and permissioned ledgers \u2014 even though crowds call them \u201cblockchains\u201d \u2014 are not blockchains in the original sense of Satoshi Nakamoto\u2019s invention. They are not immutable and decentralized. On the contrary, their design supposes that there is a controlling body, effectively making it a centralized technology, which I wrote about in Private distributed ledger technology or public blockchain?<\/p>\n<p>The second problem is with blockchains themselves. Even being designed as a decentralized open network, there is a big difference between a network with three nodes, for example, and three thousand nodes. They will have different levels of resilience to cyberthreats.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-04\/0236ebbc-7f2a-4f36-b38f-2b268e57df4b.png\"><\/figure>\n<p>So, the role of the government is to introduce regulations and standards, to make sure that people understand that when they publish a record \u2014 say, on Ethereum \u2014 it will become immutable and protected by thousands of running nodes all around the globe. If you publish it on some private distributed ledger network controlled by a cartel, you basically need to rely on its goodwill.<\/p>\n<p>The conclusion for this part of the discussion is the following. With blockchain, you don\u2019t need any external registry database, as blockchain is the registry, and there is no need for the government to maintain this infrastructure, as the blockchain network is self-sustainable. Users can publish and manage records on a blockchain without a registrar, and there must be standards that allow us to distinguish reliable blockchain systems.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Compliance\"><\/span>Compliance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Nowadays, registration procedures are deeply formalized. I don\u2019t remember any procedure that happens at the discretion of a registrar. All the rules can and must be governed by algorithms, thus removing a clerk from the process of making a record. In fact, in most cases, it is already electronic and automated. <\/p>\n<p>The difference is that this must be designed as a standard requirement for the development of a compliant DAO. Those who desire to work under the Australian jurisdiction must develop the code of their decentralized applications and smart contacts compliant with these standards.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Inside the blockchain developers\u2019 mind: Building a free-to-use social DApp<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Replaceable_rules\"><\/span>Replaceable rules<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There are two ways to create a company: You can tailor your own company constitution, a charter, and other documents. But you do have to do this if you opt into replaceable rules (in some European countries, it is called a model company constitution).<\/p>\n<p>A true DAO will work under the principle of \u201ccode is law,\u201d as Larry Lessig wrote. There cannot be such a thing as replaceable rules written in a human language. But the rules themselves can and should be digitally implemented in the form of a machine code, ran and executed by computers.<\/p>\n<p>Complications can arise if DAOs try to rely on the code and textual rules. The main concern is consistency. If there is a discrepancy between the written legal text and the machine code, the computer will be unable to read and interpret the text \u2014 it will execute the machine code.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-04\/6a5c68bf-96e1-4e6f-8cd2-03a397a029ef.png\"><\/figure>\n<p>Moreso, the problem is that records on a blockchain are immutable; you cannot change anything in the history of transitions, revoke a transaction or change a deployed code. I will touch on this problem in Part 3. The problem is in the discrepancy. Having equal legal force in both, the code and the text will potentially create a legal conflict. If lawmakers establish unconditional supremacy of a written text over the machine code, they will kill the whole idea of DAOs.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>The DAO is a major concept for 2022 and will disrupt many industries<\/em><\/strong><\/p>\n<p>The correct call is that regulators should not introduce the obligation for DAOs to have their legal documents written in human language. It may sound unreasonable \u2014 there will be a temptation of politicians and bureaucrats to be paternalistic to protect customers \u2014 but this is the whole idea of the emerging digital economy and innovations. Those who want to enjoy the full power of blockchain technologies must have this right to experiment. At the end of the day, nobody is forced to do this because we will still have the conventional forms of business and old-fashioned registries.<\/p>\n<p>Disintermediation and decentralization enabled by blockchain increase the economy\u2019s efficiency and reduce multiple risks. Politicians should let the industry develop the \u201ccode is law\u201d paradigm, as this is potentially a greater future for our society.<\/p>\n<p>There are a lot of pitfalls on this path, and if we want that future, we\u2019ll need to overcome them. Nevertheless, I don\u2019t support crypto anarchy \u2014 this is not a solution. Read about jurisdictions on blockchain in Part 3 of this series.<\/p>\n<p class=\"post-content__disclaimer\"><em>The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Oleksii Konashevych<\/strong> has a Ph.D. in Law, <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/sciencee\/\" data-internallinksmanager029f6b8e52c=\"5\" title=\"Science\" target=\"_blank\" rel=\"noopener\">Science<\/a>, and Technology and is the CEO of the Australian Institute for Digital Transformation. In his academic research, he presented a concept of a new generation of property registries that are based on a blockchain. He presented an idea of title tokens and supported it with technical protocols for smart laws and digital authorities to enable full-featured legal governance of digitized property rights. He has also developed a cross-chain protocol that enables the use of multiple ledgers for a blockchain estate registry, which he presented to the Australian Senate in 2021.<\/div>\n<\/div>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/dao-regulation-in-australia-issues-and-solutions-part-2\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; DAO regulation in Australia: Issues and solutions, Part 2 &#8220; Lawmakers in Australia want to regulate decentralized autonomous organizations (DAO). In this three-part series, Oleksii Konashevych discusses the risks of stifling the emerging phenomenon of DAOs and possible solutions. Regulating a decentralized autonomous organization (DAO) as a company, first of all, means registration as&#8230;<\/p>\n","protected":false},"author":1,"featured_media":428917,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDQvMDIzMTc2OGEtOTc4OC00N2E5LWI2ZjctNmU3Y2NmNmViNWJkLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74894,75186,78168,74983,74891,20358,70934,4965],"class_list":["post-428916","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-blockchain","tag-dao","tag-dapps","tag-decentralization","tag-ethereum","tag-australia","tag-regulation","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/428916","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=428916"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/428916\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/428917"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=428916"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=428916"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=428916"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}