The Swiss Association as a Legal Wrapper for a Global DAO and vis-à-vis the MiCA Regime

Abstract

The Swiss Association as a Legal Wrapper for a Global DAO and vis-à-vis the MiCA Regime The article explores the utilization of decentralized autonomous organizations (DAOs) and the legal framework of Swiss associations as a possible legal wrapper – particularly for globally operating DAOs. All against the backdrop of a steadily growing regulation to the likes of the EU’s MiCA framework. The discussion encompasses the essential characteristics of DAOs, emphasizing their decentralized nature, shared purpose, autonomy, and predefined rules. The article highlights the legal complexities around DAOs. Considering many DAOs operating without a deliberately chosen legal structure, the argument is made that even though DAOs might be set up with the idea to not be regulated at law, the contrary might be the case. Legal concepts to the effect of ‘joint ventures’ or ‘simple partnership’ may lead to the inadvertent formation of legal entities. Thus, legal risks may very likely loom over participants of DAOs whether they may desire that outcome or not. The article emphasizes liability as a driving force behind the need of a quest for legal wrappers. To mitigate unintended liabilities, selected solutions are being proposed. The text discusses further benefits of a legal wrapper. The argument is made that DAOs should deliberately chose a legal wrapper mirroring their nature and fitting their needs. The discussion then turns to the Swiss association as an attractive choice for globally operating DAOs. The autonomy granted to Swiss associations under Swiss Law providing for freedom, self-governance, and flexibility mirror the nature of a DAO. The features of the Swiss association and its benefits as a legal wrapper for DAOs are then being scrutinized. The text posits the establishment of a Swiss association as a solution to limit liability for DAOs participants. Ultimately, the Swiss association is presented as a wrapper offering not only liability protection but also additional benefits for DAOs, which are further explored.