Promoting Blockchain & Web3 Innovation: Introducing the Florida DAO Bill | Montague’s Law | So Good News
As Web3 and blockchain technology continue to usher in a new era of industry growth, policy and practice leaders are seeking to support Web3-supporting policymakers and politicians who believe in unlocking the technology’s full potential.
Sunshin3 is a Florida political nonprofit founded by Samuel Arms, Gary Sheng and myself: “three leaders with a passion for freedom and Florida.” Sunshin3 is committed to making Florida the capital of Web3 and blockchain innovation, and our stated goal is to be an educational resource and serve as a thought leader on proposed Web3 legislation. We intend to achieve our goals by (i) developing legislation that supports both economic growth and Web3 innovation in Florida, (ii) directing campaign contributions to “Champion Web3” political leaders, and (iii) hosting events that attract interest and investment. Web3 in Florida. In this regard, I think that Samuel Arms has a great merit.
As a Florida lawyer (and having watched the growth of Web-3 around the world), I believe Florida is uniquely poised to provide a “lab of experimentation” and spark the fire that will unleash true decentralized technology and infrastructure for humanity.
Importance of DAO
In keeping with our non-profit purpose, I am proposing a bill to properly recognize decentralized autonomous organizations as legal entities in Florida and hopefully resolve some of the legal confusion caused by many Web-3 builders and entrepreneurs focused on grassroots creation. technological infrastructure.
Currently, Web3 companies generally choose to register as non-profit organizations abroad due to the risk of issuing labels associated with a “for profit” organization. This only served to divert resources away from the United States/Florida and consequently served to reduce the amount of revenue collected by the government with associated filing/organization fees and potentially even tax revenue. To be clear, I’ve always been a proponent of urging Web-3 entrepreneurs to establish legal strategy and communications in the US, but protocols remain an industry concept that could avoid burdensome regulations (or perhaps facilitate such communications by the federal system). government) by offshoring or excluding US citizens from participating in some Web-3 projects altogether. This is a sad policy situation and we are indirectly and (unconsciously through inaction) pushing Web-3 companies to other jurisdictions. Of course, I think the US has the best minds in Web-3: Brian Armstrong, CEO of Coinbase, and Sam Bankman-Fried, founder of FTX, have done a huge amount for the industry. However, we cannot expect them to do all the heavy lifting at the state and federal level.
We hope to create a jurisdiction where software innovation can thrive in a self-governing environment; Allowing DAOs to register as an LLC or corporation and ensuring liability even in the absence of incorporation creates a safe haven for open source software innovators working for the public good.
Gary Sheng, co-founder of Sunshin3, Forbes 30 Under 30 Entrepreneur, and Web3 innovator, is a great example of the kind of community members we’re trying to attract. Sheng is also the founder of Civics Unplugged, a nonprofit ecosystem providing the next generation of leaders with the training, funding and community they need to become civic innovators. Shen reiterates the importance of this bill: “DAOs are a new type of organization that helps people achieve goals and advance society in ways that traditional organizational structures do not understand. It is important that states understand this. I am encouraged by the transparency of the board. I have spoken with legislators and regulators in Florida.” This bill Civics Hopefully it will encourage more projects like Unplugged and unlock other entrepreneurial potential that might otherwise be stifled by regulatory uncertainty.
Although the project is not complete, these five key concepts are:
- Define DAO: “Decentralized autonomous organization” (“DAO”) is any “automated transaction” or “smart contract” consisting of two or more individuals, algorithms, or smart contracts responsible for executing transactions from any blockchain smart contract wallet.
- Responsibility: No DAO member or participant, smart contract, algorithm or wallet shall be liable to any other DAO member or participant, smart contract, algorithm or wallet.
- Object structure: A DAO may be incorporated as a corporation or limited liability company, so much The Articles of Incorporation or Articles of Organization specify the smart contract that grants participation and management rights to the DAO to a member, participant, smart contract, algorithm, or wallet.
- Conflict: In the event of a conflict between Florida law and the DAO’s governing mechanics, the DAO’s governing mechanics procedures will supersede.
- Raising capital: A DAO can raise an unlimited amount of capital, so much DAO management is expressed in a publicly identifiable way and is related to open source software; however, any “off-chain” transactions through traditional banks would require Florida DAO registration as well as state financial reporting. Such financial statements shall be subject to reasonable inspection by the Commissioner of the Florida Secretary of State.
The bill recognizes that DAOs can be unincorporated while receiving liability protections while complying with the Sunshine Law. Samuel Armes, founder of Sunshin3 and founder of the Florida Blockchain Business Association (“FBBA”) expressed his support for the bill: “The bill proposed by John Montague is based on sound logic and an industry standard that represents comprehensive understanding and forward thinking. At the very least, this bill opens up a better dialogue with the right stakeholders and legislators in Florida.”
As Sunshin3 has drafted language similar to the Texas DAO legislation, the Austin Texas DAO, which promotes Web3 and crypto-friendly innovation, is working closely with the ATX DAO.
“The DAO has become the epicenter of blockchain innovation over the past few years. Given the crucial role of DAOs in the crypto ecosystem, we strongly believe that if our states and nation want to remain at the forefront of blockchain innovation, it must recognize DAOs as legal entities in their jurisdictions. While some states are moving the needle in the right direction, we believe that the issue of DAO operations within a legal entity is not yet fully resolved. In Texas, we will leverage the world-class DAO legislative expertise and cross-state partnership with Florida’s crypto law experts to find a pragmatic yet effective solution to the problem.” – Sam Padilla, ATX DAO Contributor
In August 2022, ATX DAO testified before the Texas Task Force on Blockchain Issues on DAO Legislation, with the goal of Sunshine3: Legal Recognition for DAOs. ATX DAO suggests that a first step toward this goal could be made by amending the current Texas LLC bylaws to include DAOs and provide legal clarity for current and future entities.
In consultation with the Texas Blockchain Council, they drafted proposed language changes to the LLC bylaws for initial review. Central to their proposal is the idea that DAOs should be free to choose to operate without mergers (if such operations occur on the actual chain) or to choose to merge as any entity that suits their needs. Organization Choice ATX DAO’s definition of a “DAO” appears to be a group of individuals rather than an individual. Proposed amendments to existing statutes include the inclusion of DAO and DAO technology language such as “electronic data systems” and “computer code agreements” that legally support DAO operations. ATX believes that by integrating DAO language into existing legislation, legal clarity and recognition will guide future DAOs, encourage crypto-businesses, and make Texas a leader in crypto innovation.
“When asked about our DAO legislative work, I used to joke that the last thing I expected when I decided to move full-time into space as an engineer was to become an unofficial expert on the Code of Business Conduct. But it’s important work, and it needs to be done. And what better way to do it than by using the academic expertise of legal scholars and the empirical wisdom of DAO operators across the state, listening to the crypto community at large. ” – Sam Padilla.
The need for reform
I am introducing this proposal in the main and important state of the digital asset industry. Now more than ever, policymakers are recognizing the flaws in the current regulatory environment and calling for action. Recently, Sen. John Hickenlooper (D-Colo.) sent a letter to the SEC on October 13, 2022, urging them to issue a new regulatory framework for digital assets, saying that “regardless of the risks and benefits of these new assets, existing laws and regulations will affect how digital assets are used in the marketplace.” It is not intended to solve the problem.” In its letter, it recommends that the SEC clarify which digital assets qualify as securities and how they can be issued and registered, and set clear guidelines regarding disclosure requirements, registration of digital asset securities trading platforms, and the trading and custody of digital assets. .
Hickenlooper said, “Clear regulations promote an environment where investors are protected; responsible financial innovation is implemented by providing clear rules of the road to market participants; and investor confidence is built through stakeholder feedback”. My DAO bill intends to serve that purpose. Anessa Allen Santos, managing attorney at IntelliLaw and board member of the FBBA, reminds us that “DAOs that intend to operate outside of securities regulations should be carefully thought out around the Howey test governing securities issued by ordinary entities,” so that a clear policy is an appropriate design for DAOs. is needed for and a clear regulatory framework for digital assets as a whole is critical for the industry.
This weekend, November 4th 2022, I will join Samuel and Anessa as participants at the Florida Bitcoin and Blockchain Summit (“FBBS”) in Tampa, Florida. Hosted by innovator and entrepreneur Chris Krimitsos, FBBS is for startups, prospective stakeholders, and passionate advocates for Florida and the Web3 community. If you are interested in learning more about cryptocurrency, blockchain technology, and how Florida is leading Web3 innovation, you can find more information about the event by visiting the FBBS website.