The full potential behind the use of blockchain technologies is strongly associated with the concept of the “Decentralised Autonomous Organisation (DAO)”. DAOs enable the individual members of an organisation to interact with each other in an autonomous and automated manner without involving any central party, ultimately removing any need for a middleman as well as facilitating digitalisation and automation of processes.

Supported by blockchain technology’s core feature acting as the single source of truth between independent parties, DAOs can be automated and implemented in code through the use of smart contracts. The early advent and hype around DAOs has, however, faced severe limitations mainly due to legal and other governance considerations. The lack of a central party in a DAO setup makes it difficult to remain in compliance with the various laws applicable in the field of AML, KYC, securities or VAT regulations and additionally complicates fundamental governance questions for communities.

DSAO – A unique RegTech response by the European Blockchain Association.

In response to the unworkable, legal aspects of DAOs, the “European Blockchain Association (EBA)” has started off with the bold vision to come up with a legally-compliant alternative to the DAO model without comprising its revolutionary approach. With this in mind, the EBA has developed and implemented a novel governance model called “Decentralised Semi-Autonomous Organisation (DSAO)”. It ultimately incorporates many of the great benefits of DAOs based on blockchain technology with a legal model fitting well into the existing legal & regulatory landscape.

The EBA itself is the very first user of this new DSAO model and has been established as an “eingetragener Verein (e.V.)” or association in Germany. Compared to DAOs, the EBA’s DSAO model differs in two key ways:

• The incorporation of the DSAO as a legal entity
• The installation of a detailed set of governance processes involving the appointment of a (human) Board of Directors as well as an independent (human) appellate body to resolve disputes (Blockchain Arbitration Forum in the case of the EBA).

Like the ordinary DAOs the EBA’s DSAO utilises a cryptocurrency-based incentivisation scheme (CrowdstartCoin XSC) and a decentralised voting system leveraging blockchain strengths.

The EBA conducted a pan-European survey on the legal aspects of the DSAO model.

Having started with the bold ambition of developing a legally workable alternative to the DAO model, it was very important that the EBA assess the legal fit of the DSAO model in other European jurisdictions for the first proof of concept. Relying on a model which comes with significant legal shortcomings in other jurisdictions would not be an option since the principles behind decentralisation call for remote collaboration across the globe! For this purpose, the EBA has drafted a pan-European survey reflecting on various legal matters to take into consideration for the deployment of the DSAO model. The survey is divided into three parts:

• External representation of a DSAO
• Tokenisation of membership in a DSAO
• Exchange of value within a DSAO

During Q2 2019, the EBA was already able to obtain the first responses from various lawyers and governance specialists for several European countries including Germany, France, Italy, Lithuania, Malta, Slovakia, and Switzerland.

EBA’s key findings from the pan-European survey on the DSAO

We have summarised our initial key findings for the seven European jurisdictions in the following illustrations. 

What’s next?

The EBA keeps further evaluating the legal fit of the DSAO model and is strongly committed to building collaboration models incorporating the principles of DAOs. In particular, we are also happy to assist you in case you are interested in taking the DSAO approach to the implementation stage! 

Further on, we will also plan to discuss the key implications and some country highlights in the course of one of the upcoming EBA meetups. 

If you want to get in touch with us, feel free to contact Kevin Leuthardt, Steward WG Governance: kevin.leuthardt@eublas.org

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In this April’s update round, we shared our excitement about the imminent entry of the EBA in the Munich court register – a process that finally comes to its end.

Following this, we discussed new enhanced editing options for EBA Cards:
Each EBA member can now present herself to let others know about her interests and to start conversations based on her expertise. We recently added a number of new fields and options allowing members to add much more information to their profiles. Thus, the EBA Card could become a valuable asset in a blockchain expert’s CV.

After these more administrative topics, we had the pleasure of watching Working Group Governance steward Kevin Leuthardt presenting preliminary results of the first pan-european survey of the legal and regulatory impacts of Decentralised Semi-Autonomous Organisations DSAOs, such as the EBA itself.

It was great to see that Kevin managed to get valuable feedback from different countries on a topic which itself is quite sophisticated. Here’s the link to the preliminary results. It would be absolutely great if each EBA member could check in her personal rolodex (for younger members: that’s the archaic version of a contact network) if there are more potential target persons (i.e. European lawyers) we could invite to answer the survey! Please feel free to distribute this link to everybody who matches this requirement.

Let’s say a BIG THANK YOU to Kevin and Rebecca to take care of this survey – great work!

We concluded the update round by discussing how to implement Crowdstart Coin XSC as a means of exchange of services in EBA. On the one hand, we need to find services for EBA members that are valuable in order to justify the member fee, on the other hand, XSC shall be used to exchange services among EBA members individually. Ideas how to foster XSC are welcome – please add them on Slack!

That’s it for today – see you soon!

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Our governance model specifically addresses the needs of our organisation which is designed as a decentralized semi-autonomous system DSAO: starting as an association (legal entity) based out of Germany, EBA is set to incentivize all members in a way that no central incentive will be needed to run and bring the organisation forward. A token-based incentive scheme is used to reward members for adding value to the organisation.

Beside being organised by its governance model, the members of the organisation must have the ability to change its own governance model – i.e. the ability of self-regulation.

Finally, the EBA governance model has been designed in accordance with other existing and widely accepted regulatory frameworks, such as Eclipse and Apache, in order to facilitate the acceptance with potential members.

These three key principles, the ability of self-regulation, being based on accepted regulatory frameworks, and the integrated incentive scheme, should constitute a sound basis for a successfull start of our decentralized semi-autonomous organisation.

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The EBA is designed as a so-called Decentralised Semi-Autonomous Organisation DSAO with each separate entity acting as an independent node, connected with others through a blockchain protocol, with a governmental framework as stipulated in the EBA statutes. The EBA is internally organized and powered through blockchain-based payment and accounting protocol leveraging the crypto currency XSC.

The EBA sees itself as a protocol and toolset with the single purpose to serve its mebers. Although the association itself is a central legal entity, the statutues only serve as a necessary link to the real world, with its laws and regulations, as well as its communicative needs. The EBA founders are deeply convinced and inclined to create and operate the EBA as a DSAO as much as possible. The essence of a DSAO is not only the almost complete absence of a central authority, but foremost the implementation of an incentive scheme that incentivizes individual community members to actively participate in and add value to the network. With its blockchain-based payment and ledger protocol RAAY and the crypto currency Crowdstart Coin XSC, EBA members participate in a network that rewards actively and consistently added value to the blockchain ecosystem at large.

We encourage you to join the European Blockchain Association if you are a member of the blockchain community! Contact us, connect with other members and actively participate in building the blockchain ecosystem!

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