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The Law Commission of the United Kingdom has concluded that decentralized autonomous organizations (DAOs) do not require separate legal oversight and can be integrated within existing financial regulations and tax frameworks.
The Law Commission, a statutory body focused on law reforms, released a scoping paper on DAOs, highlighting the absence of a general consensus on the defining characteristics of a DAO.
Regulatory Challenges for DAO Oversight
The commission noted that creating a blanket law for DAOs is not currently feasible due to the diverse ecosystem, which often adapts its operations based on local judicial requirements.
The various types of DAOs, such as pure DAOs, hybrid arrangements, and digital legal entities, add to the complexity of defining these decentralized organizations for law reforms, as they often operate as trustless entities.
“The Law Commission has already agreed with the Government to undertake a review of trust law. This will consider — in general terms rather than specifically in the DAO context — the arguments for and against the introduction of more flexible trust and trust-like structures in England and Wales.”
Call for International Cooperation
Additionally, the commission recommended reviewing the Companies Act 2006 to improve oversight of DAOs operating as limited liability partnerships. It also suggested examining reforms for nonprofit DAOs and current Anti-Money Laundering (AML) regulations.
The commission emphasized the importance of international cooperation to develop a global AML and tax framework for DAOs.
In related news, the Solicitors Regulation Authority (SRA) in the United Kingdom issued a warning about a Bitcoin scam facilitated by fake lawyers. Scammers impersonated legitimate law firms, using potential victims’ personal data and Bitcoin payments to avoid public disclosure.
The SRA advised individuals to verify the authenticity of suspicious correspondence by directly contacting the law firm through reliable means and checking the SRA’s records to confirm the legitimacy of the individual or firm.
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