Australia’s lawmakers want to regulate decentralized autonomous organisations (DAOs). Oleksii Konashevych, a three-part series contributor, discusses the dangers of stifling DAOs’ growth and suggests possible solutions.
On March 21, 2022 during Blockchain Week Australia, Senator Andrew Bragg from Australia made several interesting statements about the intent of Australian lawmakers to create regulations for decentralized autonomous organisations.
It is not new per se. The Australian Senate Committee, headed by Senator Bragg, recommended that autonomous decentralized organizations be brought under the Corporations Act in October 2021. This Act sets standards for corporate governance as well as personalities.
Plan of Senator
What did Senator Andrew Bragg then say?
“Decentralized autonomous organisations can replace companies. This could be the most important development since 1602, when the Amsterdam Stock Exchange first listed joint-stock companies.
He said, “If this doesn’t make policymakers pay attention, maybe it will.” DAOs, which are considered partnerships and not companies, are not subject to company tax. 17.1% of Commonwealth government revenue was attributed to company tax. Our dependence on company income tax cannot be sustained,” Bragg said. “DAOs pose a serious threat to the tax base. They must be addressed immediately.”
You can access an extended version of his statement on his website. The senator also provides some economic data to back up his conclusions.
To clarify, partners in a partnership pay taxes, but they do so separately. Individuals pay income tax, and companies in the partnership pay company tax as would any normal company.
Next, the senator clarifies which aspects of DAOs the government intends to regulate. “Recognizing that DAOs can be self-regulated and transparent with an integrated system for governance,
He said, “The Treasury will have to address these issues, but it is up to DAOs to continue living up to their names.” Any attempt to create a code would be futile.
Similar: Australian senators push for country to be the next crypto hub
It sounds good, doesn’t?
If the legislation is properly implemented, these three goals can be met: consumers will be safe from unscrupulous businessmen; revenues will be taxed appropriately and the DAOs industry will not be suppressed.
Here’s the problem. We have seen all DAO and fintech regulations in the world go down this bureaucratic route of relying only on traditional approaches and methods. Red tape. They are just different in the tightness of their nooses.
Problem is, new ways to regulate this industry aren’t being discussed in the public eye and even among politicians. They are not on our agenda. These concepts are real, and I spent five of my academic years researching them.
Similar: Tax considerations for decentralized autonomous organisations
There is a risk that these new concepts will not be raised. Therefore, politicians and bureaucrats won’t refer to existing methods when it comes time to regulate. This is bad because they only know the traditional ways of regulating. DAOs were created to address outdated approaches, bureaucracy, and red tape.
Parts 2 and 3 will discuss the replacement of a company registry as well as the “Code is Law” paradigm.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Oleksii Konashevych holds a PhD in Law, Science, and Technology and is the CEO at the Australian Institute for Digital Transformation. He presented the concept of a new type of property registries that is based on blockchain technology in his academic research. He proposed title tokens, and supported it by technical protocols for smart laws. This will enable full-featured legal management of digital property rights. He also created a cross-chain protocol to allow multiple ledgers to be used in a blockchain estate registry. This protocol was presented to the Australian Senate 2021.