Carla L. Reyes

What Can Autonomous Corporations Teach Us About Legal Personhood?

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Corporations are increasingly using technology to conduct business, seeking greater automation and efficiencies while decreasing costs. Indeed, several states are considering changes to their business-formation laws to accommodate completely automated businesses – those run through, or by, self-executing computer code and artificial intelligence. Internationally, several jurisdictions already offer corporation-equivalent business structures to completely automated businesses. Together, these developments set the stage for a world where autonomous business organizations enjoy the same rights and responsibilities as corporations – a world in which an autonomous organization enjoys the legal fiction of personhood. In a new article, Autonomous Corporate Personhood,[1] I … Read more

What Public Blockchain Protocol Governance Can Learn from Corporate Governance

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Despite the hype, blockchain technology remains in an early phase of development. Indeed, for many public blockchain protocols, the process of building consensus around the desired trajectory of the code base remains under-conceptualized and informal. Such uncertainty has led to some sharp disagreements that have arguably damaged the legitimacy of certain protocols and increased marketplace skepticism. Indeed, there is growing recognition that, although the individuals leading development of public blockchain protocols initially eschewed the notion of formal governance and claimed that decentralization eliminated any need for it, in reality those individuals created governance structures without viewing them as such. As … Read more

How Should the Law Classify Decentralized Businesses?

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In July 2017, the Securities and Exchange Commission (SEC) issued a ruling on The DAO, a decentralized smart-contract based investment fund, determining that the tokens it sold were unregistered securities and warning that other initial coin offerings (ICO) may need to comply with securities laws.[1] The DAO operated a decentralized venture capital firm on top of the Ethereum protocol. Investors contributed ether (a crypto-currency) to The DAO and received DAO tokens in exchange. The DAO held the ether in smart contracts, while the DAO tokens entitled investors to: (1) vote on which investment proposals to fund, and (2) a … Read more

Companies Face Risk and Opportunity with Distributed Governance Structures

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In 2016, enterprising software developers sought to create a business entity with a unique governance structure: a leaderless, decentralized venture capital firm that would allow investors to vote on and collectively fund proposals. The Distributed Autonomous Organization (DAO) attracted more capital than its backers had anticipated, becoming the largest crowdfunded project ever with $168 million raised. To participate, investors poured funds into ether, a digital currency designed to facilitate decentralized applications on Ethereum, which is an open source, blockchain-based computing platform. After acquiring ether, investors exchanged it for the DAO’s tokens, entitling them to participate in its governance, profits, and … Read more