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You are speaking categorically when that is not the case. If a DAO token is a security, it does need to be registered: it either needs to be registered or have

You are speaking categorically when that is not the case. If a DAO token is a security, it does need to be registered: it either needs to be registered or have available an exemption from registration. There are DAOs that try to fit within an exemption from registration. See the LAO, and it's offshoots, like Red DAO, Flamingo DAO, etc., which sell LLC interests to a limited number of accredited investors. [0] https://medium.com/openlawofficial/the-lao-a-for-profit-limited-liability-autonomous-organization-9eae89c9669c https://medium.com/openlawofficial/the-lao-a-for-profit-limi... [1] https://www.flamingodao.xyz/ https://www.flamingodao.xyz/

arcticbull 5y ago
> There are DAOs that try to fit within an exemption from registration. See the LAO, and it's offshoots, like Red DAO, Flamingo DAO, etc., which sell LLC interests to a limited number of accredited investors. Ok, but that's just an LLC with extra steps no? If you're only accepting accredited investors then you're required to validate that they are accredited meaning that you have to pierce the veil of anonymity. It imposes legal control over the transfer of these tokens which means there's no reason whatsoever for them to be decentralized, permissionless and on the blockchain? Accredited investors were always welcome to buy whatever toxic garbage they wanted.
- berberous 5y ago
  I think you are treating DAOs as a single monolithic idea, when it is more like an infant design space. I would say the core idea of a DAO is this: how can we organize a disparate group of people around a common goal, more easily than in the past? Whether you think they are a joke or not, ConstitutionDAO, SpiceDAO (which I think is the worst example in this space given their lack of diligence or thought on IP issues), OrangeDAO, FlamingoDAO, etc., are all unique in that they have organized a disparate group of people more quickly than in the past, and enabled them to more efficiently work together towards a shared goal. There are many ideas being explored: 1. Can we have better laws (like Wyoming is exploring) or regulations? 2. If the DAO is decentralized enough, are the tokens still (or should they be) a security? Are there better ways to regulate something like this globally? 3. How do you coordinate a disparate group of people? How should you let in new entrants, or weight votes? How should a DAO manage its treasury? 4. What happens if all voting proposals are public and verifiable on the blockchain? Is that good or bad? At it's core, yes, I think you can say that a DAO is basically the idea of a corporation, except with most of the discussion on Discord and with on-chain voting, and plus some securities laws issues that are at best gray areas and at worst, in some cases, clear violations. But I think that is ignoring that something worthwhile might come out of that design space.
  - arcticbull 5y ago
    I mean yes, that's fair, I am. Broadly though, it's because they seem to be unified behind the idea of issuing unregistered securities and selling them to un-accredited investors because they don't seem to think the registration of securities is valuable. I disagree, because, the Great Depression. They're not setting out to solve a limitation around business organization. You can do basically anything you want out of a Delaware LLC or C-corp except sell the shares to an un-accredited investor without registering them. There's even a light-weight way to do that with Reg CF and Reg A+. You want public voting? Ok, that doesn't require a blockchain and it certainly doesn't require a whole new legal framework for organizing a business. Twitter has managed to have polls for years. Most people actually trying to build a business of value aren't trying to reimagine the concept of a business. By all means, go with God, find a better way to organize companies. If they land one one, I'll happily use it. But so far all I see is grift, crime and frankly, little else.
    - notch656a 5y ago
      Those entities eligible to be accredited investors are estimated to control the better side of 3/4 of private wealth in US. I don't see how allowing (or DAO/LAO somehow illegally bypassing security laws) un-accredited investors could possibly be a deciding factor in recreating a Great Depression. Most (private) wealth can already buy whatever "toxic" stuff they want in your own words. Also, it's possible to sell these investments to non US-persons under regulation S without bothering with the accredited investors. >Most people actually trying to build a business of value aren't trying to reimagine the concept of a business. Most people actually trying to build a business fail. It would be fallacious for me to imply that means not reimagining concept of business means likely failure, even though it is technically true.
- a_t48 5y ago
  > If you're only accepting accredited investors then you're required to validate that they are accredited meaning that you have to pierce the veil of anonymity. Really curious - is it enough for another party to attest that they are accredited? Ie- could I set up a company selling verification services, saying “the person with this key is accredited, send the feds our way if they ask”? (Pure mental exercise, just honestly curious)
  - notch656a 5y ago
    Look into regulation S and selling exclusively to non-US persons.
    - a_t48 5y ago
      Thanks. I can only half see why this would apply, but probably with more caffine it will make more sense.
- halpert 5y ago
  DAOs offering ownership interest via tokens is not an LLC with extra steps. It’s LLC++. An owner can easily sell their stake to someone else, write an option against it, etc. Sure, all those things were possible before, but now it’s much easier and generally programmable by anyone. That’s progress.
  - arcticbull 5y ago
    Is this a problem anyone actually has? Not just that, what about transferring shares of a business requires the business to have tokens issued on a blockchain?
    - halpert 5y ago
      Sure you can transfer ownership by going to a company, getting approval from the board to update the cap table, and then executing the transaction via wire transfer. Or you could do it near instantly on the blockchain. And how would you write an option on your ownership stake using conventional technology? That seems like it would be prohibitively hard. How would you use your ownership as collateral in a loan? The illiquid nature of private stock may turn some lenders off. On a blockchain, the collateral can be part of the smart contract. Many technological advances simply make already possible things easier. For instance, checks were around since the time of the Crusades. Functionally, checks transfer money from one account to another. We also have a postal service we can use to send checks almost anywhere in the world. So why do we have digital banking infrastructure and wire transfers?
      - arcticbull 5y ago
        Corporate approval is optional and the company would have to waive it to operate in the model you describe. The friction you describe is at the will of the company. They can allow free transfer now they choose not to. The issues you describe are intentional encumbrances on the part of the company and corporate attorneys which they could stop at any time. You haven’t described how this model would change their minds. Changing their minds is the thing holding back what you desire not the technical limitations.

arcticbull 5y ago

> There are DAOs that try to fit within an exemption from registration. See the LAO, and it's offshoots, like Red DAO, Flamingo DAO, etc., which sell LLC interests to a limited number of accredited investors. Ok, but that's just an LLC with extra steps no? If you're only accepting accredited investors then you're required to validate that they are accredited meaning that you have to pierce the veil of anonymity. It imposes legal control over the transfer of these tokens which means there's no reason whatsoever for them to be decentralized, permissionless and on the blockchain? Accredited investors were always welcome to buy whatever toxic garbage they wanted.

berberous 5y ago
I think you are treating DAOs as a single monolithic idea, when it is more like an infant design space. I would say the core idea of a DAO is this: how can we organize a disparate group of people around a common goal, more easily than in the past? Whether you think they are a joke or not, ConstitutionDAO, SpiceDAO (which I think is the worst example in this space given their lack of diligence or thought on IP issues), OrangeDAO, FlamingoDAO, etc., are all unique in that they have organized a disparate group of people more quickly than in the past, and enabled them to more efficiently work together towards a shared goal. There are many ideas being explored: 1. Can we have better laws (like Wyoming is exploring) or regulations? 2. If the DAO is decentralized enough, are the tokens still (or should they be) a security? Are there better ways to regulate something like this globally? 3. How do you coordinate a disparate group of people? How should you let in new entrants, or weight votes? How should a DAO manage its treasury? 4. What happens if all voting proposals are public and verifiable on the blockchain? Is that good or bad? At it's core, yes, I think you can say that a DAO is basically the idea of a corporation, except with most of the discussion on Discord and with on-chain voting, and plus some securities laws issues that are at best gray areas and at worst, in some cases, clear violations. But I think that is ignoring that something worthwhile might come out of that design space.
- arcticbull 5y ago
  I mean yes, that's fair, I am. Broadly though, it's because they seem to be unified behind the idea of issuing unregistered securities and selling them to un-accredited investors because they don't seem to think the registration of securities is valuable. I disagree, because, the Great Depression. They're not setting out to solve a limitation around business organization. You can do basically anything you want out of a Delaware LLC or C-corp except sell the shares to an un-accredited investor without registering them. There's even a light-weight way to do that with Reg CF and Reg A+. You want public voting? Ok, that doesn't require a blockchain and it certainly doesn't require a whole new legal framework for organizing a business. Twitter has managed to have polls for years. Most people actually trying to build a business of value aren't trying to reimagine the concept of a business. By all means, go with God, find a better way to organize companies. If they land one one, I'll happily use it. But so far all I see is grift, crime and frankly, little else.
  - notch656a 5y ago
    Those entities eligible to be accredited investors are estimated to control the better side of 3/4 of private wealth in US. I don't see how allowing (or DAO/LAO somehow illegally bypassing security laws) un-accredited investors could possibly be a deciding factor in recreating a Great Depression. Most (private) wealth can already buy whatever "toxic" stuff they want in your own words. Also, it's possible to sell these investments to non US-persons under regulation S without bothering with the accredited investors. >Most people actually trying to build a business of value aren't trying to reimagine the concept of a business. Most people actually trying to build a business fail. It would be fallacious for me to imply that means not reimagining concept of business means likely failure, even though it is technically true.
a_t48 5y ago
> If you're only accepting accredited investors then you're required to validate that they are accredited meaning that you have to pierce the veil of anonymity. Really curious - is it enough for another party to attest that they are accredited? Ie- could I set up a company selling verification services, saying “the person with this key is accredited, send the feds our way if they ask”? (Pure mental exercise, just honestly curious)
- notch656a 5y ago
  Look into regulation S and selling exclusively to non-US persons.
  - a_t48 5y ago
    Thanks. I can only half see why this would apply, but probably with more caffine it will make more sense.
halpert 5y ago
DAOs offering ownership interest via tokens is not an LLC with extra steps. It’s LLC++. An owner can easily sell their stake to someone else, write an option against it, etc. Sure, all those things were possible before, but now it’s much easier and generally programmable by anyone. That’s progress.
- arcticbull 5y ago
  Is this a problem anyone actually has? Not just that, what about transferring shares of a business requires the business to have tokens issued on a blockchain?
  - halpert 5y ago
    Sure you can transfer ownership by going to a company, getting approval from the board to update the cap table, and then executing the transaction via wire transfer. Or you could do it near instantly on the blockchain. And how would you write an option on your ownership stake using conventional technology? That seems like it would be prohibitively hard. How would you use your ownership as collateral in a loan? The illiquid nature of private stock may turn some lenders off. On a blockchain, the collateral can be part of the smart contract. Many technological advances simply make already possible things easier. For instance, checks were around since the time of the Crusades. Functionally, checks transfer money from one account to another. We also have a postal service we can use to send checks almost anywhere in the world. So why do we have digital banking infrastructure and wire transfers?
    - arcticbull 5y ago
      Corporate approval is optional and the company would have to waive it to operate in the model you describe. The friction you describe is at the will of the company. They can allow free transfer now they choose not to. The issues you describe are intentional encumbrances on the part of the company and corporate attorneys which they could stop at any time. You haven’t described how this model would change their minds. Changing their minds is the thing holding back what you desire not the technical limitations.