The Law Commission of the United Kingdom believes that decentralized autonomous organizations (DAOs) do not warrant separate legal oversight and should be accommodated within existing financial regulations and tax frameworks.
The Law Commission, which is a statutory body dedicated to law reforms, published a scoping paper on DAOs, revealing the lack of general consensus about the characteristics of a DAO.
Regulatory hurdles for DAO oversight
According to the commission, implementing a blanket law on DAOs is not feasible in its current form as the disparate ecosystem tends to adjust its operations according to local judicial requirements.
The various “spectrum of DAOs,” including pure DAOs, hybrid arrangements and digital legal entities, add to the complexity of characterizing such decentralized organizations for law reforms that often operate as trustless entities.
“The Law Commission has already agreed with Government to undertake a review of trust law. This will consider — in general terms rather than in the DAO context specifically — the arguments for and against the introduction of more flexible trust and trust-like structures in England and Wales.”
Call for international cooperation
Moreover, the commission recommended reviewing the Companies Act 2006 to facilitate oversight of DAOs operating as limited liability partnerships. It also proposed examining the scope of reforms for nonprofit DAOs and existing Anti-Money Laundering (AML) regulations.
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The commission also called for international cooperation to identify the need for a global AML and tax framework for DAOs.
The Solicitors Regulation Authority (SRA) in the United Kingdom parallely issued a warning about a Bitcoin (BTC) scam facilitated by fake lawyers.
Scammers impersonating legitimate law firms Attwaters Solicitors and Attwaters Jameson Hill Solicitors allegedly used potential victims’ personal data and Bitcoin payments to avoid leaking information to the public.
The SRA advised individuals to conduct due diligence if they receive suspicious correspondence. This includes verifying the email’s authenticity by contacting the law firm directly through reliable means and checking the SRA’s records to confirm the individual or firm’s authorization.
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