Study examines how to characterise Decentralised Autonomous Organisations to inform future law reform

Professor Sarah Green, Commissioner for Commercial and Common Law at the Law Commission of England and Wales from 2020-2024.

12 July 2024

The Law Commission has published a Scoping Paper on Decentralised Autonomous Organisations (DAOs). The paper, compiled by the Commercial and Common Law team, led by Commissioner Professor Sarah Green, looks into how DAOs can be characterised and how the law of England and Wales might accommodate them now and in the future. The research seeks to identify current issues around DAOs to inform any future law reform or innovations.

The term ‘DAO’ describes, in very broad terms, a new type of online organisation using rules set out in computer code. They are part of what is sometimes called the ‘crypto ecosystem’.

A DAO will generally bring together a community of participants with a shared goal – whether profit-making, social or charitable – often with some control over governance matters distributed among participants through the use of distributed ledger technology (DLT) and smart contracts. 

The term DAO does not necessarily indicate a particular type of organisational structure and, therefore, cannot imply any specific legal treatment. 

Commissioner for Commercial and Common Law, Professor Sarah Green said,

"Digital Autonomous Organisations are internet-based entities that are difficult to define and to align with existing legal forms. There is even disagreement as to what can properly be called ‘a DAO’.

“In this paper we look at a wide range of different types of arrangements that might use the term, giving rise to different legal questions.

“Our aim in this paper is twofold: to analyse the current legal implications of DAOs and to explore how the law might develop in the future to accommodate them.

“The scoping paper explains what DAOs are and describes the current treatment of DAOs under the law of England and Wales. It identifies how the current law might respond to, or facilitate, DAOs.”

Professor Sarah Green will be stepping down as Commissioner for Commercial and Common Law from September 2024, and will be returning to the University of Bristol Law School.

“I am delighted at the prospect of returning to work at the Law School, particularly at such an exciting time in the law’s development, as technology continues to present new and pressing challenges to long-established rules and policies. It’s hard to imagine a more transformative time for legal doctrine, particularly in the commercial sphere.” - Professor Sarah Green.

Paper: Decentralised Autonomous Organisations (DAOs)

Read our recent Q&A with Sarah: “It’s fantastic to see my work having an impact in the real world.” Q&A with Law Commissioner Professor Sarah Green

Further information

Professor Sarah Green was Law Commissioner for Commercial and Common Law at the Law Commission of England and Wales from 2020 until 2024. During that time, she was responsible for the Electronic Trade Documents Act 2023, as well as law reform in relation to digital assets, smart contracts, intermediated securities, DAOs, arbitration and corporate criminal liability.

In 2023, she won the International Chamber of Commerce’s Award for the Individual Who Has Made the Greatest Contribution to the Digitalisation of Trade and the Outstanding Achievement Award at the British Legal Technology Awards. In 2022, she was placed on the Women in Fintech Power List and on Bloomberg’s “Who to Watch” Crypto List.

Sarah sits on the UK Jurisdiction Taskforce, the Commonwealth Working Group on Legal Reform, LegalUK, the International Digital Assets Counsel Association, the Digital Commonwealth, and the APPG on Blockchain Technologies Advisory Board. She was previously Professor of Private Law at the University of Bristol and Professor of the Law of Obligations at the University of Oxford. Before embarking on her academic career, she was a software consultant at Accenture.

Professor Green has written books and articles on a variety of issues including digital assets and documents, virtual currencies, blockchains and intermediated securities, smart contracts, sale of goods law as applicable to digital assets, negligence and wage theft.