Incorporating the Unincorporated: Reassessing the Legal Personhood of Decentralised Autonomous Organisations (DAOs)
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Abstract
Decentralisation is often regarded as the holy grail for blockchain governance, offering transparency and security without reliance on central authorities. These features are particularly attractive in the governance of a wide range of blockchain-based projects. Beyond the apparent self-governing and trustless façade lies profound legal uncertainty and significant challenges regarding accountability. On this basis, this paper explores whether DAO should be recognised as a legal person or continue to exist within a legal void. At one end of the spectrum, legal recognition would address pressing issues of accountability, enforceability, and regulatory oversight. The grant of legal personhood further addresses broader legal complications within the financial system. However, recognition raises concerns about compatibility of external legal structures with the decentralised ethos of DAOs. Arguably, introduction of external legislative governance risks undermining the very essence of decentralisation. A comparative legal analysis is undertaken with a focus on key jurisdictions that have taken the steps in legislative governance of DAOs. This paper further evaluates if DAOs can be meaningfully situated within the established legal doctrines in company law, or if their decentralised structure renders such integration inherently problematic. Finally, the paper proposes a calibrated framework for the potential regulation of DAO in Malaysia.
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