Lawyers and developers working in decentralized finance (DeFi) are asking for a new limited liability legal entity in Australia that would represent decentralized autonomous organizations (DAOs).
The Digital Law Association, an association of technology lawyers, and global law firm Herbert Smith Freehills are lobbying an Australian Senate committee to propose the creation of the new entity, the Australian Financial Review (AFR) reported.
Such a move would give legal standing to the blockchain-based organizations, enabling DAOs to contract with other legal persons.
A DAO is a decentralized network of nodes organized through blockchain code. It may include members and nodes from around the world. Members usually participate in decision-making by voting with governance tokens.
For the purposes of corporate governance, boards of directors would be replaced with internet communities. Having a limited liability structure would prevent every member from "being potentially liable for losses incurred by decisions made by a member of the community," the report said.
Shareholders of limited liability entities are not liable for company debts or losses unless they have provided personal guarantees, according to the Australian Securities and Investments Commission.
The Senate Select Committee on Australia as a Technology and Financial Center is tasked with forming Australia's fintech and blockchain policy.
The lawyers argue that a limited liability DAO status would attract developers and entrepreneurs to Australia, the article said.
The AFR has previously reported that crypto talent is flocking to countries with clearer regulation on the industry, such as Germany and Singapore.