DAOs, Compliance Challenges, and Economic Gardening at DAO Day: Insights from Magnus Jones of EY

DAOs, Compliance Challenges, and Economic Gardening - DAO Day 2023

The DAO Day conference, held on March 28, 2023, brought together a myriad of experts from various fields to discuss the intricacies, challenges, and future of Decentralized Autonomous Organizations (DAOs). One of the standout sessions was a keynote by Magnus Jones from EY, who delved deep into the compliance challenges faced by DAOs and the concept of economic gardening.

Magnus Jones, representing EY, began by addressing the timeline of blockchain and its mainstream adoption. He highlighted that while Bitcoin transactions started in 2009, Ethereum and smart contracts only came into play around 2015. This timeline suggests that DAOs might become more mainstream around 2029, given the typical trajectory of technological adoption.

Jones also touched upon the initiatives of the Norwegian Central Bank and the business entity register. The Central Bank is currently in the fourth test phase of its CBDC (Central Bank Digital Currency) project, built on a blockchain-based solution. The business entity register, on the other hand, has moved the public shareholder register of Norway to the public mainnet of Ethereum. This move is significant as it indicates a shift towards decentralized systems and a preparation for the token economy.

Key Insights from the Session:

  • Blockchain's Evolution: Magnus emphasized the gradual evolution of blockchain, noting that while Bitcoin transactions began in 2009, Ethereum and smart contracts only emerged in 2015. This timeline suggests that mainstream adoption of DAOs might be closer to 2029.
  • Norwegian Initiatives: The Norwegian Central Bank is in its fourth test phase of its CBDC project, which is built on a blockchain solution. Meanwhile, the business entity register in Norway has transitioned the public shareholder register to Ethereum's public mainnet, indicating a significant move towards decentralization.
  • Tax Implications: Magnus stressed the importance of understanding the tax implications associated with DAOs. He mentioned that while DAOs offer numerous benefits, they also come with their share of challenges, especially from a tax perspective. Governments worldwide are trying to understand how to tax DAOs, given their decentralized nature.
  • Future Predictions: Magnus believes that by 2030, more than half of all business contracts will be executed by a smart contract, incorporating mechanisms of DeFi and DAOs.

Magnus Jones envisions a future where the mechanisms of DAOs play a pivotal role in business operations. By 2030, he predicts that a significant portion of business contracts will be executed via smart contracts, integrating elements of DeFi and DAOs. This transition, while promising, also brings forth numerous challenges, especially in terms of compliance and taxation.

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