DAO Or Never: The Missing SEBI Playbook On Token Regulation
- IJLLR Journal
- Sep 13
- 1 min read
Nandita Yadav & Jyotsna Sood, National Law Institute University, Bhopal
ABSTRACT
Decentralised Autonomous Organisations (“DAOs”) represent a radical departure from conventional organisational structures. Their heterodox features, which range from token-based membership models to autonomous operations, pose significant challenges for legal recognition and regulation. While jurisdictions like the European Union, Canada, and the USA have experimented with frameworks that treat DAOs as limited liability companies and their tokens as securities, the Indian legal regime remains underdeveloped. Section 2(h) of the Securities Contracts (Regulation) Act, 1956 limits the scope of what may be subject to recognition as “securities”. This gap creates regulatory uncertainty and exposes participants to liability and financial risks. Comparative analysis reveals that foreign regulators have adopted flexible approaches. The paper argues that India must similarly recalibrate its securities framework to accommodate decentralised digital assets and balance innovation with investor protection. The paper attempts to identify common regulatory themes across jurisdictions and delineate gaps in the Indian framework to propose a reimagined, substance-driven definition of securities as a potential path toward effective regulation of DAO tokens.
