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I really struggle to see how most DAOs and cryptocurrency efforts aren't mostly just ways to skirt around existing financial security laws. For example, could

I really struggle to see how most DAOs and cryptocurrency efforts aren't mostly just ways to skirt around existing financial security laws. For example, could organizations give stocks/shares/tokens/choose-your-security-name to users of a platform in the current (US) legal environment? I don't have the legal background to know. Can they sell private securities to any user? I think no because it would go against accredited investor laws. Also, I think if they're selling to an open public, it might violate SEC laws by being a public security, not a private security, unless they also reported truthfully about risks, etc., to the SEC. So what if the law got rid of the accredited investor requirement? Or got rid of the reporting requirements for public vs private securities? So I think one part is that companies aren't legally allowed to sell private shares to just any individual and if they do sell to any individual, they aren't legally allowed to not report to the SEC. I think another part is that I wonder how many companies actually want more cooperative/democratic style ownership. Cooperatives (one member, one vote) have struggled to get investment because of that precise equality in decision making. [edit-added] And also, a more equal profit-sharing may not be in the interest of many people wanting to become the next unicorn billionaire. So it makes me wonder how many of the orgs using DAOs are doing so because they want to become more equal cooperative-like orgs, and how many are doing so to skirt securities laws.

yawnxyz 5y ago
I think academia is an interesting use case, e.g. VitaDAO.com and Molecule.to
- jimkleiber 5y ago
  I wonder if even their methods are dancing around US securities laws, but I don't fully understand how cooperatives overlap with securities laws [0]. Despite that, I like what seems to be their intention around cooperatively-owned research, so I'll try to follow them to see what comes of it. Thank you. edit: Also, maybe one of the problems is that the internet is global and most regulation is at most national, so even if it were to break US laws, does it break other national, regional, or local laws? Do DAOs and crypto lead to some larger global form of governance? [0]: https://www.casebriefs.com/blog/law/securities-regulation/securities-regulation-keyed-to-coffee/definitions-of-security-and-exempted-securities/reves-v-ernst-young-2/ https://www.casebriefs.com/blog/law/securities-regulation/se...
lalaland1125 5y ago
> I really struggle to see how most DAOs and cryptocurrency efforts aren't mostly just ways to skirt around existing financial security laws. It's 99% just evading existing laws. The best example of this is the browser Brave which only uses a cryptocurrency so that they could raise money without following the accredited investor laws.
- hackingforfun 5y ago
  A DAO can automate things currently handled by humans. There may need to still be some human involvement (and probably should be), but I'd say there can probably be less involvement than there is now in, for example, real estate transactions. It doesn't even have to be a DAO, it can just be a smart contract. Things like escrow can be automated. These things can also improve transparency assuming they are done on an open ledger. That could make corruption more visible and harder to get away with. There is more to this technology than just evading securities laws.
  - jimkleiber 5y ago
    What stops a company from currently creating a more automated solution for real estate transactions except for current laws or an inability to integrate with government? I think some of the tech is cool and yes can automate things, I just wonder if it automates these things because it avoids integrating with government systems, which can be horrible out of date at times. So maybe it's not so much skirting of laws, but sometimes also working around systems, not with a bad intention, but because things aren't necessarily keeping up with technological change. Also, could an open ledger make corruption more visible and harder to get away with? Yes, it could. Will it? I'm not so sure.
    - hackingforfun 5y ago
      > What stops a company from currently creating a more automated solution for real estate transactions except for current laws or an inability to integrate with government? They have no incentive to change how they've done things. I do think it would be cool if there was an automated solution for real estate transactions that didn't require crypto (or smart contracts). That would be great and I think someone should do it if they can. > So maybe it's not so much skirting of laws, but sometimes also working around systems, not with a bad intention, but because things aren't necessarily keeping up with technological change. I think this is right on the mark. The US banking system is a great example. Many of the arguments I see against the benefits of instant payments in crypto are from people in Europe, where instant payments are commonplace. I do think the competition and innovation in crypto forces existing legacy structures to innovate, which IMO is a good thing. The other thing is to consider those who are unbanked and unable to participate in existing structures, but do have smart phones. I think crypto can play a part in their lives as well. > Also, could an open ledger make corruption more visible and harder to get away with? Yes, it could. Will it? I'm not so sure. I agree. I'm not sure crypto will supersede all existing structures. I do like the idea of governments and politicians having to be more transparent, but I don't think they will give up what they have now.
afpx 5y ago
I believe Wyoming recently passed laws to give DAOs rights as corporations. I am curious if I'd be able to, say, give partial "ownership" or royalties to my users.
- jimkleiber 5y ago
  Yeah, again, I don't know much about law in general but especially this stuff, just wonder whether the Wyoming treat DAOs as LLCs except Wyoming can take away protection if believing the DAO is fraudulent jives with SEC regulations [0]. I'm sure there will be different cities/states jumping on the bandwagon, as mayors are seemingly trying to be cool by taking bitcoin salaries. I don't know how much of it conflicts with current law and how much law will just change with the flow, a la Uber and AirBnB. [0]:https://protos.com/wyoming-dao/ https://protos.com/wyoming-dao/
  - freejazz 5y ago
    There is no reason why a DAO or any other organization cannot be an LLC or whatever other kind of business entity so long as it complies with the requirements thereof
    - jimkleiber 5y ago
      True, if they comply with the requirements. I just wonder if DAOs, which typically have tokens available to any public purchaser, would fall into a category of securities and therefore public securities, which would violate maybe not the requirements of the business entity but other laws. From what I understand, and I admittedly don't feel certain on this at all, LLCs are private entities where ownership can only be offered privately, not open to be sold on a public exchange, and many DAOs plan to sell their tokens on public exchanges. Again, I think laws can change and personally think we need more global overarching governance to deal with internet interactions, yet think that some of these things are quite incompatible/contradictory to current law.
      - freejazz 5y ago
evergrande 5y ago
Which is good because accredited investor laws prevent poor people from obtaining wealth in the same way the wealthy do. It's an uneven playing field. Let me give a concrete example: The first time I used Stripe and Uber, I immediately wanted to invest. But I couldn't because I wasn't wealthy nor well connected enough. If they had been a DAO, I could have invested $100 and paid off my student debt and theoretical mortgage AND probably covered losing investments. One winner covers many losers, which is how VCs play the game. That's the power of early investment. Those kind of returns are only available to the already wealthy under our current laws. Why should that be? By the time a company IPOs most of the opportunity has already been extracted. How many of us have wanted to invest in Stripe for years now? We still can't. We can only sit and watch as its largest growth years go by and the rich get richer. In the eventual IPO they'll sell their shares to us now that they've appreciated by orders of magnitude. These laws should be abolished, but I wouldn't hold one's breath. So I'm in favor of the cryptoeconomy being an alternative that one can opt into.
- vorpalhex 5y ago
  Or you could have invested $1000 and then lost it all because it turns out the company you invested in was a naked scam. Accredited investor laws exist to protect common people from the endless amount of scams we see crypto have today. If you don't like the laws then petition to have them changed, but simply ignoring them will probably result in the SEC knocking on your door.
  - evergrande 5y ago
    "We're just protecting you" is a transparent excuse to rig the game. It's pulling up the ladder. If it was actually in the best interests of the people, you educate and give them tools. You don't lock them out. And you focus on preventing and going after the bad actors, the scammers.
    - Daishiman 5y ago
      > "We're just protecting you" is a transparent excuse to rig the game. It's pulling up the ladder. This is a truism that's not based on reality. You can question whether the protection is actually useful for the case, but there's a reason a bunch of professional licenses exist, and they do protect people. I don't want to "educate myself" to see if my doctor is competent to practice.

yawnxyz 5y ago

I think academia is an interesting use case, e.g. VitaDAO.com and Molecule.to

jimkleiber 5y ago
I wonder if even their methods are dancing around US securities laws, but I don't fully understand how cooperatives overlap with securities laws [0]. Despite that, I like what seems to be their intention around cooperatively-owned research, so I'll try to follow them to see what comes of it. Thank you. edit: Also, maybe one of the problems is that the internet is global and most regulation is at most national, so even if it were to break US laws, does it break other national, regional, or local laws? Do DAOs and crypto lead to some larger global form of governance? [0]: https://www.casebriefs.com/blog/law/securities-regulation/securities-regulation-keyed-to-coffee/definitions-of-security-and-exempted-securities/reves-v-ernst-young-2/ https://www.casebriefs.com/blog/law/securities-regulation/se...

lalaland1125 5y ago

> I really struggle to see how most DAOs and cryptocurrency efforts aren't mostly just ways to skirt around existing financial security laws. It's 99% just evading existing laws. The best example of this is the browser Brave which only uses a cryptocurrency so that they could raise money without following the accredited investor laws.

hackingforfun 5y ago
A DAO can automate things currently handled by humans. There may need to still be some human involvement (and probably should be), but I'd say there can probably be less involvement than there is now in, for example, real estate transactions. It doesn't even have to be a DAO, it can just be a smart contract. Things like escrow can be automated. These things can also improve transparency assuming they are done on an open ledger. That could make corruption more visible and harder to get away with. There is more to this technology than just evading securities laws.
- jimkleiber 5y ago
  What stops a company from currently creating a more automated solution for real estate transactions except for current laws or an inability to integrate with government? I think some of the tech is cool and yes can automate things, I just wonder if it automates these things because it avoids integrating with government systems, which can be horrible out of date at times. So maybe it's not so much skirting of laws, but sometimes also working around systems, not with a bad intention, but because things aren't necessarily keeping up with technological change. Also, could an open ledger make corruption more visible and harder to get away with? Yes, it could. Will it? I'm not so sure.
  - hackingforfun 5y ago
    > What stops a company from currently creating a more automated solution for real estate transactions except for current laws or an inability to integrate with government? They have no incentive to change how they've done things. I do think it would be cool if there was an automated solution for real estate transactions that didn't require crypto (or smart contracts). That would be great and I think someone should do it if they can. > So maybe it's not so much skirting of laws, but sometimes also working around systems, not with a bad intention, but because things aren't necessarily keeping up with technological change. I think this is right on the mark. The US banking system is a great example. Many of the arguments I see against the benefits of instant payments in crypto are from people in Europe, where instant payments are commonplace. I do think the competition and innovation in crypto forces existing legacy structures to innovate, which IMO is a good thing. The other thing is to consider those who are unbanked and unable to participate in existing structures, but do have smart phones. I think crypto can play a part in their lives as well. > Also, could an open ledger make corruption more visible and harder to get away with? Yes, it could. Will it? I'm not so sure. I agree. I'm not sure crypto will supersede all existing structures. I do like the idea of governments and politicians having to be more transparent, but I don't think they will give up what they have now.

afpx 5y ago

I believe Wyoming recently passed laws to give DAOs rights as corporations. I am curious if I'd be able to, say, give partial "ownership" or royalties to my users.

jimkleiber 5y ago
Yeah, again, I don't know much about law in general but especially this stuff, just wonder whether the Wyoming treat DAOs as LLCs except Wyoming can take away protection if believing the DAO is fraudulent jives with SEC regulations [0]. I'm sure there will be different cities/states jumping on the bandwagon, as mayors are seemingly trying to be cool by taking bitcoin salaries. I don't know how much of it conflicts with current law and how much law will just change with the flow, a la Uber and AirBnB. [0]:https://protos.com/wyoming-dao/ https://protos.com/wyoming-dao/
- freejazz 5y ago
  There is no reason why a DAO or any other organization cannot be an LLC or whatever other kind of business entity so long as it complies with the requirements thereof
  - jimkleiber 5y ago
    True, if they comply with the requirements. I just wonder if DAOs, which typically have tokens available to any public purchaser, would fall into a category of securities and therefore public securities, which would violate maybe not the requirements of the business entity but other laws. From what I understand, and I admittedly don't feel certain on this at all, LLCs are private entities where ownership can only be offered privately, not open to be sold on a public exchange, and many DAOs plan to sell their tokens on public exchanges. Again, I think laws can change and personally think we need more global overarching governance to deal with internet interactions, yet think that some of these things are quite incompatible/contradictory to current law.
    - freejazz 5y ago

evergrande 5y ago

Which is good because accredited investor laws prevent poor people from obtaining wealth in the same way the wealthy do. It's an uneven playing field. Let me give a concrete example: The first time I used Stripe and Uber, I immediately wanted to invest. But I couldn't because I wasn't wealthy nor well connected enough. If they had been a DAO, I could have invested $100 and paid off my student debt and theoretical mortgage AND probably covered losing investments. One winner covers many losers, which is how VCs play the game. That's the power of early investment. Those kind of returns are only available to the already wealthy under our current laws. Why should that be? By the time a company IPOs most of the opportunity has already been extracted. How many of us have wanted to invest in Stripe for years now? We still can't. We can only sit and watch as its largest growth years go by and the rich get richer. In the eventual IPO they'll sell their shares to us now that they've appreciated by orders of magnitude. These laws should be abolished, but I wouldn't hold one's breath. So I'm in favor of the cryptoeconomy being an alternative that one can opt into.

vorpalhex 5y ago
Or you could have invested $1000 and then lost it all because it turns out the company you invested in was a naked scam. Accredited investor laws exist to protect common people from the endless amount of scams we see crypto have today. If you don't like the laws then petition to have them changed, but simply ignoring them will probably result in the SEC knocking on your door.
- evergrande 5y ago
  "We're just protecting you" is a transparent excuse to rig the game. It's pulling up the ladder. If it was actually in the best interests of the people, you educate and give them tools. You don't lock them out. And you focus on preventing and going after the bad actors, the scammers.
  - Daishiman 5y ago
    > "We're just protecting you" is a transparent excuse to rig the game. It's pulling up the ladder. This is a truism that's not based on reality. You can question whether the protection is actually useful for the case, but there's a reason a bunch of professional licenses exist, and they do protect people. I don't want to "educate myself" to see if my doctor is competent to practice.