Decentralized Autonomous Organizations: An Indian Perspective On Legal And Regulatory Issues
- IJLLR Journal
- Jul 4
- 1 min read
Muskan Tyagi, Symbiosis Law School, Pune
Ananya Gupta, Symbiosis Law School, Pune
ABSTRACT
Decentralised Autonomous organizations are a rapidly growing concept that works on the principle of blockchain with smart contracts automatically doing tasks on trigger of events. The core feature of these organizations is their decentralised nature, i.e. they do not possess any single owner. These organization act as investment pools, and utilise cryptocurrency to pursue a common goal. This concept has gained traction but so does liability concerned with such DAOs. These DAOs fail to fit within the traditional laws made for existing corporations, making it complex for regulatory bodies to ensure their regulation.
The paper aims to highlight the significant challenges posed by the lack of such explicit regulations concerning the operations of DAOs. The research begins by providing a detailed explanation of DAOs, including their fundamental components and the mechanisms through which they operate. The paper also provides for a comparative analysis across various jurisdictions wherein DAO has been legally recognized and how the laws of those jurisdictions deal with DAO operations. Further, the paper elaborates on India’s take on such blockchain technologies while explaining about the issues that may arise due to the non-regulation of DAOs by a hypothetical example. The primary issues addressed are: the liability of DAOs in matters of a potential default, taxation dilemma, and the money laundering concerns arising from the very nature of DAOs. The research is concluded with a set of recommendations that must be inculcated in the legislation governing DAOS to seamlessly regulate them within the Indian context.
Keywords: DAO, Smart Contracts, Blockchain, DLT, Cryptocurrency
