On 11 July 2024, the Law Commission published a scoping paper considering how Decentralised Autonomous Organisations (DAOs) can be characterised, and identifying current issues relating to DAOs to inform any future law reform or innovations.
The Law Commission explains that DAOs are, broadly, a new type of online organisation using rules set out in computer code. These organisations are part of the so-called “crypto ecosystem”,and will generally bring together a community of participants with a shared goal – whether profit-making, social or charitable – often with some control over governance matters distributed among participants through the use of distributed ledger technology and smart contracts.
The scoping paper explains what DAOs are, describes the current treatment of DAOs under the law of England and Wale, and identifies how the current law might respond to, or facilitate, DAOs. The Law Commission’s work focuses on the aspects of DAOs that are significant for policy and legal purposes rather than providing detailed descriptions of their technical features. The paper also identifies areas where further work might be useful to accommodate DAOs, if considered desirable, and to ensure that their activities are within the reach of the regulatory regime.