A DAO does not fit well within the current landscape of recognized organizational structures and, rather than shoehorning it into one, states should recognize a new hybrid entity. This Note’s proposed Cryptocorporation form, with rules and protections better suited to the unique qualities of a DAO, could allow for the most appropriate tax treatment of shared profits, limit personal liability, and allow for an appropriate voting structure as articulated in the White Paper. The proposed Cryptocorporation would also protect investors and give the SEC more presumptive jurisdiction over the token-based-stock that is issued and represented exclusively through blockchain tokens. Cryptocorporations can actively attempt to preserve the pseudonymity which exists on a relevant blockchain network, because of the capabilities of electronic communication and the security of blockchain-based recordkeeping. In sum, by borrowing from and building upon the attributes of partnerships, LLCs, and corporations, the concept of the Cryptocorporation has the potential to foster the productive use and development of smart contract technology for decentralized organizations, while mitigating the risks to investors and facilitating a more frictionless secondary market.
"Cryptocorporations: A Proposal for Legitimizing Decentralized Autonomous Organizations,"
Utah Law Review: Vol. 2019
, Article 5.
Available at: https://dc.law.utah.edu/ulr/vol2019/iss5/5