Thanks again for this great community contribution opportunity.
Please let me share some initial considerations regarding the potential regulatory implications attached to the concept of continuous organisations. As a caveat, my considerations likely follow the perspective of the Swiss regulators.
As you state in your white paper the DAT does not have any form of governance, it rather resembles the concept of an irrevocable trust (trust being anyway a legal fiction not supported by every jurisdiction). You further outline that the DAT code could be read as the trustee whereas the organisation would be the grantor and the investors the beneficiaries.
I guess there could be a certain probability that certain jurisdictions look through the DAT who issues the FAIR securities and look at it as an security offering by the organisation. Since the regulatory perspectives have been significantly improved over the last couple of months, such security token offering is still feasible. This could hold true for example as a Reg CF in the US or as a private placement offering (e.g. in Switzerland) which both benefit from simplification given the compliance with certain limitations. At a later stage, a Reg A+ or an offering supported by a proper prospectus could follow. Such approach would be certainly doable and be in compliance with the laws whilst still benefiting from the alignment of stakeholder interests induced by COs.
On a different note, I have been thinking about any potential regulatory hurdles resulting from the buy-back-functionality available to sales transactions. In case such buy-back-feature is read by the regulatory authorities as a repayment obligation to the investor, bank authorisation could become necessary. I do not necessarily believe that this ultimately holds true but I would be eager to understand whether you have already received some feedback on this note.
For your information: In Switzerland, the requirements for the classification of an activity as an acceptance of public deposits (cryptos) subject to bank authorisation are as follows:
- The client cannot dispose of the cryptos (paid in in exchange for FAIR securities) any time without the involvement of the bank / custodian (here DAT);
- The dealer or custodian (DAT) has a repayment obligation to the client; and
3.The accepted cryptos would be included in the bankruptcy assets of the dealer or custodian (DAT).
However, the mere secure safekeeping of cryptos is not subject to a bank authorisation.
In any case, I hope the above-mentioned considerations make sense to you. I am looking forward to your feedback.