{"id":472867,"date":"2022-07-11T16:19:00","date_gmt":"2022-07-11T13:19:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/us-crypto-regulation-bill-aims-to-bring-greater-clarity-to-daos\/"},"modified":"2022-07-11T16:19:00","modified_gmt":"2022-07-11T13:19:00","slug":"us-crypto-regulation-bill-aims-to-bring-greater-clarity-to-daos","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/us-crypto-regulation-bill-aims-to-bring-greater-clarity-to-daos\/","title":{"rendered":"# US crypto regulation bill aims to bring greater clarity to DAOs"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 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-6a4175cfe62e6\" 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-6a4175cfe62e6\" 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\/us-crypto-regulation-bill-aims-to-bring-greater-clarity-to-daos\/#%E2%80%9D_US_crypto_regulation_bill_aims_to_bring_greater_clarity_to_DAOs_%E2%80%9C\" >&#8221; US crypto regulation bill aims to bring greater clarity to DAOs &#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\/us-crypto-regulation-bill-aims-to-bring-greater-clarity-to-daos\/#What_are_DAOs_and_why_is_this_regulation_important\" >What are DAOs and why is this regulation important?<\/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\/us-crypto-regulation-bill-aims-to-bring-greater-clarity-to-daos\/#How_will_the_Lummis-Gillibrand_Act_affect_DAOs\" >How will the Lummis-Gillibrand Act affect DAOs?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_US_crypto_regulation_bill_aims_to_bring_greater_clarity_to_DAOs_%E2%80%9C\"><\/span>&#8221; US crypto regulation bill aims to bring greater clarity to DAOs &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-2a0745c6>On June 7, United States Senators Cynthia Lummis and Kirsten Gillibrand launched the much anticipated Responsible Financial Innovation Act, proposing a comprehensive set of regulations that address some of the biggest questions facing the digital assets sector. By providing holistic guidance to the rapidly growing industry, the bill offers a bipartisan response to President Biden\u2019s <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.weforum.org\/agenda\/2022\/03\/executive-order-cryptocurrency\/\">call<\/a> for a whole-of-government <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>roach to regulating crypto.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-07\/65a562b7-6273-46ae-b0f3-9e4b0941054f.png\"><\/figure>\n<p>Among its many proposals, the bill <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.gillibrand.senate.gov\/news\/press\/release\/-lummis-gillibrand-introduce-landmark-legislation-to-create-regulatory-framework-for-digital-assets\">establishes<\/a> basic definitions, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.gillibrand.senate.gov\/imo\/media\/doc\/Lummis-Gillibrand%20Section-by-Section%20%5bFinal%5d.pdf\">provides<\/a> an exemption for digital currency transactions and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.gillibrand.senate.gov\/imo\/media\/doc\/Lummis-Gillibrand%20Responsible%20Financial%20Innovation%20Act%20%5bFinal%5d.pdf\">harmonizes<\/a> the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), delineating regulatory swim lanes and granting a significant jurisdictional expansion to the CFTC.<\/p>\n<p>The bill is perhaps most productively seen as an invitation for further dialogue. In the coming months, its success or failure will largely be determined by the strength of the debates it generates. It has already engendered strong reactions from the industry. One of the most hotly debated \u2014 and potentially impactful \u2014 sections of the legislation pertains to decentralized autonomous organizations (DAOs). While the act helpfully clarifies elements of DAO policy, further action is required to answer the remaining questions around legal status, applicable laws and jurisdictional authority.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Powers On\u2026 Summer musings after two particularly bad months in cryptoland<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_DAOs_and_why_is_this_regulation_important\"><\/span>What are DAOs and why is this regulation important?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>DAOs are bodies that use blockchains, digital assets and associated technologies to collaboratively allocate resources, manage activities and make decisions. By making operational and financial information publicly viewable and empowering members to suggest, vote on and directly ratify changes to organizations, DAOs offer a way to decentralize the operation of firms. The pioneering Responsible Financial Innovation Act would address basic questions of DAO policy including defining DAOs, establishing incentives for incorporation and bringing them into the tax code.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-07\/41581524-e16a-4cc0-82ea-8baf50f5e403.png\"><\/figure>\n<p>In recent years, DAOs have experienced radical growth. According to the data analytics site DeepDAO, in 2021 alone, the total value of DAO treasuries skyrocketed fortyfold, from $400 million to $16 billion, and the number of participants surged 130x from 13,000 to 1.6 million. DAOs today are being developed to achieve a diversity of aims including governing financial services, facilitating networking and managing philanthropic activities. DAOs are even being leveraged to provide support in war zones.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">\u201c2021: The (1st) year of DAO\u201d<\/p>\n<p>Here is how the DAO ecosystem grew in last 12 months:<\/p>\n<p>DAOs\u2019 treasuries listed on <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/DeepDAO_io?ref_src=twsrc%5Etfw\">@DeepDAO_io<\/a>  went up 40x, from $400M in January to $16B by December 2021<\/p>\n<p>Participants in DAOs went up 130x, from 13k in January to 1.6 Million by December 2021 <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/t.co\/YFcblpBOK8\">pic.twitter.com\/YFcblpBOK8<\/a><\/p>\n<p>\u2014 DeepDAO.io (@DeepDAO_io) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/DeepDAO_io\/status\/1476540745427218432?ref_src=twsrc%5Etfw\">December 30, 2021<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>With DAOs growing at such a rapid rate, some forecasters are <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/gritdaily.com\/industry-expert-predicts-dao-assets-will-reach-1-trillion-over-the-next-10-years\/\">predicting<\/a> that the novel organizational form could expand to one trillion dollars in assets under management by 2032, influencing fields as diverse as investment, research and philanthropy. DAOs can offer a host of benefits including greater equity and diminished censorship.<\/p>\n<p>Relative to traditional organizations like corporations, a report recently published by the World Economic Forum in collaboration with Wharton finds that DAOs may offer a way to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.weforum.org\/whitepapers\/decentralized-autonomous-organizations-beyond-the-hype\/\">achieve<\/a> greater transparency, adaptability, trust and speed. Likewise, DAOs make possible rapid experimentation and can be directed towards a variety of goals, including pro<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social<\/a> aims. On the other hand, today\u2019s DAOs confront challenges of voter engagement, governance, power concentration and cybersecurity.<\/p>\n<p><strong><em>Related: \u200b\u200b<\/em><\/strong><strong><em>Decentralization, DAOs and the current Web3 concerns<\/em><\/strong><\/p>\n<p>Perhaps most importantly, DAOs face regulatory uncertainty and fragmentation. In the U.S., for example, DAOs confront a byzantine legislative landscape defined by multiple competing state-level frameworks. While these legislative approaches can create optionality for DAOs, they also present a compliance hurdle, and many have faced criticism for their shortcomings. Without clear legal status, DAOs face operational limitations, cannot pay taxes and may risk exposing members to unlimited liability.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_will_the_Lummis-Gillibrand_Act_affect_DAOs\"><\/span>How will the Lummis-Gillibrand Act affect DAOs?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Due to the indeterminate nature of DAO policy, the Lummis-Gillibrand act could be especially meaningful for the emerging form. The bill proposes amending the Internal Revenue Code of 1986 to incorporate DAOs, defining them as organizations that are governed \u201c[\u2026.]primarily on a distributed basis,\u201d are properly incorporated and use smart contracts \u2014 automatically executing promissory code \u2014 to generate collective action. While this attempt at defining DAOs may at first seem inconsequential, its effects could be wide-ranging.<\/p>\n<p>Crucially, the bill defines DAOs in the context of <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.lummis.senate.gov\/wp-content\/uploads\/Lummis-Gillibrand-Section-by-Section-Final.pdf\">amending<\/a> the tax code. The development of taxation requirements for DAOs could grant legitimacy to the novel form. But, doing so could also create new obligations including incorporation under specific jurisdictions that may pose a challenge to DAOs with global footprints. Expert interpretations of the bill\u2019s significance for DAOs are mixed.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Decentralized autonomous organizations: Tax considerations<\/em><\/strong><\/p>\n<p>While some assert that incorporation, for example, could <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/adamscochran\/status\/1533993929196060672\">foist<\/a> requirements on DAOs, others <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/lex_node\/status\/1535170922742677504\">argue<\/a> that the bill does not mandate that all DAOs must be incorporated but instead only makes it an option for those seeking to benefit from tax opportunities. As this debate suggests, the bill\u2019s ultimate meaning for DAOs is far from clear. Indeed, many of its implications will depend upon the outcomes of a <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> of review processes and votes.<\/p>\n<p>Though the bill has been brought by a bipartisan pair of policymakers with seats on critical committees, including the Senate Agriculture and Banking Committees, Senators Lummis and Gillibrand have <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.politico.com\/news\/2022\/06\/06\/lummis-and-gillibrands-crypto-hype-machine-00036712\">asserted<\/a> that up to four Senate committees would ultimately have authority over the legislation. Even so, the bill\u2019s very existence is laudable for its attempt to provide clarity to the emergent sector.<\/p>\n<p>In a recent comment, Senator Lummis herself asserted that \u201c[the bill] is an important step towards securing America\u2019s financial leadership for generations to come.\u201d By providing comprehensive guidance on digital assets, the legislation has already made progress.<\/p>\n<p>For DAOs, it has begun addressing many of the questions that builders have been grappling with for years. But for the Senators\u2019 vision to be realized, DAO policy, among other issues, will need to be wrestled with and, ultimately, meaningfully advanced. Now it is up to industry leaders, policymakers and others in the ecosystem to work together to collaboratively develop the effective fit-for-purpose policy required for this nascent organizational structure to thrive.<\/p>\n<p class=\"post-content__disclaimer\"><em>This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.<\/em><\/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>Aiden Slavin<\/strong> is the Project Lead of the World Economic Forum\u2019s Crypto Impact and Sustainability Accelerator. At the Forum he leads initiatives across the public and private sectors to advance the Web3 policy and impact agenda. Prior to the World Economic Forum, he led policy and partnerships programs at ID2020, an alliance focused on realizing the benefits of blockchain-based digital ID. He holds a BA from Columbia University and an MSc from the University of Oxford.<\/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. 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By providing holistic guidance to&#8230;<\/p>\n","protected":false},"author":1,"featured_media":472868,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDcvYWRkMTNkNTYtMTg4MC00YmMxLWEyYzEtYjUyMzY0ZjFmMWZhLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74894,75186,75269,74355,71511,70934,70289,4965,67874],"class_list":["post-472867","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-blockchain","tag-dao","tag-us-government","tag-adoption","tag-government","tag-regulation","tag-senate","tag-technology","tag-united-states"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/472867","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=472867"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/472867\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/472868"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=472867"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=472867"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=472867"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}