Australia may regulate decentralized autonomous organizations

 

DAOs appeared as the response to red vid and obsolete approaches in governance. Will regulation in Australia stifles inventions Lawgivers in Australia want to regulate decentralized independent associations (DAO). In this three-part series, Oleksii Konashevych discusses the pitfalls of stifling the arising miracle of DAOs and possible results.

Regulating a decentralized independent association (DAO) as a company, first of all, means enrollment as a company. But who remembers why we need that registry in the first place? Will anyone question whether a blockchain-grounded DAO needs enrollment at all?

Historically, the government took the part of that trusted third party that, through its public agency — i.e., a registry office keeps records about a company who's in charge, its address, its constitution, shares and shareholders, and so on. 

In any legal issue or disagreement, the register will take the registry as the source of verity. Registration can be canceled if a company does illegal business. Registration is also demanded taxation. The public registry body keeps this data, icing its authenticity and safety.

Currently, the registry is electronic and needs dependable structure software and data centers, cybersecurity measures, etc. Either, there are formal rules and conditions for the enrollment. So, each record is vindicated against these rules. All of this is the responsibility of the registry office.

Now let’s see what a blockchain is. This technology can ensure an unknown position of protection for electronic records. Once a record is published on a dependable blockchain, there's no way to tamper with it. Either, druggies publish and manage their data on a blockchain without a conciliator.

So with blockchains, at least two functions of the registry office come spare

● The register doesn't need to make records — druggies can do it themselves.

● The register doesn't need to maintain the registry structure.

And this can be the most concerning part for functionaries and retrogrades. No bone is precisely responsible for maintaining the tally structure. It's an open, tone-organized, and tone-governing network with no authority. Indeed after 14 times of successful work, people still don't believe and accept that this is passing.we don’t need any conventional registry for a DAO enrollment because the blockchain is the registry itself.

Which blockchain and the part of the regulation

I should say that not every blockchain is dependable. And then comes the part of the government in terms of regulation. First of all, private and permissioned checks indeed though crowds call them “ blockchains aren't blockchains in the original sense of Satoshi Nakamoto’s invention. 

They aren't inflexible and decentralized. On the negative, their design supposes that there's a controlling body, effectively making it a centralized technology, which I wrote about in Private distributed tally technology or public blockchain?

The alternate problem is with blockchains themselves. Indeed is designed as a decentralized open network, there's a big difference between a network with three bumps, for illustration, and three thousand bumps. They will have different situations of adaptability to cyberthreats.

the part of the government is to introduce regulations and norms, to make sure that people understand that when they publish a record say-so, on Ethereum it'll come inflexible and defended by thousands of running bumps each around the globe. However, you principally need to calculate its goodwill, If you publish it on some private distributed tally network controlled by a combination.

The conclusion for this part of the discussion is the following. With blockchain, you don’t need any external registry database, as blockchain is the registry, and there's no need for the government to maintain this structure, as the blockchain network is tone-sustainable. Druggies can publish and manage records on a blockchain without a register, and there must be norms that allow us to distinguish dependable blockchain systems.

Compliance Currently, enrollment procedures are deeply homogenized. I don’t remember any procedure that happens at the discretion of a register. All the rules can and must be governed by algorithms, therefore removing a clerk from the process of making a record. In fact, in utmost cases, it's formerly electronic and automated.

The difference is that this must be designed as a standard demand for the development of a biddable DAO. Those who ask to work under the Australian governance must develop the law of their decentralized operations and smart connections biddable with these norms.

There are two ways to produce a company You can confirm your company constitution, a duty, and other documents. But you do have to do this if you conclude into interchangeable rules (in some European countries, it's called a model company constitution).

A true DAO will work under the principle of “ law is law,” as Larry Lessig wrote. There can not be such a thing as interchangeable rules written in a mortal language. But the rules themselves can and should be digitally enforced in the form of a machine law, ran and executed by computers.

Complications can arise if DAOs try to calculate the law and textual rules. The main concern is inconsistency. However, the computer will be unfit to read and interpret the textbook — it'll execute the machine law, If there's a distinction between the written legal textbook and the machine law.

Moreso, the problem is that records on a blockchain are inflexible; you can not change anything in the history of transitions, drop a sale or change a stationed law. I'll touch on this problem in Part 3. The problem is in the distinction. Having equal legal force in both, the law and the textbook will potentially produce a legal conflict. However, they will kill the whole idea of DAOs, If lawgivers establish unconditional supremacy of a written textbook over the machine law.

The correct call is that controllers shouldn't introduce the obligation for DAOs to have their legal documents written in mortal language. It may sound unreasonable there will be a temptation of politicians and functionaries to be paternalistic to cover guests  but this is the whole idea of the arising digital frugality and inventions. Those who want to enjoy the full power of blockchain technologies must have this right to trial. At the end of the day, nothing is forced to do this because we will still have the conventional forms of business and old-fashioned registries.

Disintermediation and decentralization enabled by blockchain increase frugality’s effectiveness and reduce multiple pitfalls. Politicians should let the assiduity develop the “ law is law” paradigm, as this is potentially a lesser future for our society.

There are a lot of risks on this path, and if we want that future, we’ll need to overcome them. Nonetheless, I don’t support crypto lawlessness  this isn't a result. Read about authorities on blockchain in Part 3 of this series.