The Legal Nature and Status of DAOs in Legal Systems: Decentralized Autonomous Organizations as Novel Institutions

Abstract:
A Decentralized Autonomous Organization (DAO) is an emerging phenomenon in the world of law and technology, challenging traditional organizational structures. This research examines the legal nature and status of DAOs within various legal systems, including Iran, Imami jurisprudence, the United States, the European Union, Switzerland, and Singapore. The study employs a comparative and analytical methodology to outline an appropriate legal framework for DAO recognition by comparing different regulatory approaches.

Initially, DAOs are defined as blockchain-based entities governed by smart contracts, highlighting their characteristics—such as decentralized management, code-based governance, and token-based participation—in comparison to traditional corporations. The legal nature of DAOs within selected jurisdictions is then analyzed, particularly focusing on regulatory gaps that result in the non-recognition of legal personality and the imposition of unlimited liability on members. Furthermore, ownership and control structures within DAOs are examined, addressing issues such as the concentration of power among major token holders (whales) and the absence of accountability mechanisms.

Another key aspect of the study involves legal challenges surrounding DAO adoption, including incompatibility with traditional registration and recognition requirements, jurisdictional ambiguities, anti-money laundering compliance, and stakeholder protection. Finally, the status of DAOs within Shia jurisprudence is assessed, with emphasis on principles such as gharar (uncertainty), taslit (control over property), mudaraba (profit-sharing), and shirka (partnership).

Findings suggest that while DAOs present legal risks when not aligned with existing regulatory frameworks, legislative reforms—such as granting limited legal personality to DAOs or adapting them to contractual institutions—can mitigate these challenges. Additionally, Islamic jurisprudence, with its emphasis on transparency, justice, and mutual consent, may legitimize DAOs within a structured framework. The study concludes that optimal utilization of DAOs as a novel entity necessitates both national and international legislative developments, alongside a reassessment of jurisprudential perspectives. It is recommended that Iran and other legal systems adopt policies inspired by global experiences to facilitate DAO recognition and oversight.

Keywords: Decentralized Autonomous Organization, DAO, Legal Personality, Comparative Law, Blockchain, Imami Jurisprudence, Token-Based Participation

Introduction:
The advent of blockchain technology and smart contracts has enabled new forms of organization, with DAOs being the most prominent example. A DAO is a code-based virtual entity that operates autonomously without centralized management, governed by pre-programmed rules. Decision-making in DAOs is typically conducted collectively through token-based voting mechanisms. This novel concept bridges the gap between law and technology, raising fundamental legal questions: Can a DAO possess independent legal personality? How does it fit within existing legal frameworks, and how should it be regulated?

The significance of this issue stems from the fact that DAOs manage billions of dollars in assets and engage millions of participants globally while lacking clear legal status. Most jurisdictions have yet to establish dedicated legal frameworks for DAOs, leaving them to operate outside formal regulatory structures. This legal uncertainty poses risks to users, creates potential avenues for illicit activities (e.g., money laundering), and introduces regulatory challenges for innovative projects. In Iran and Imami jurisprudence—where legal legitimacy is grounded in Islamic principles—novel financial and organizational structures must be evaluated within the framework of established doctrines such as gharar (excessive uncertainty) and taslit (control over property). Meanwhile, jurisdictions like the United States, Europe, and Switzerland have begun exploring ways to integrate DAOs into existing legal structures, such as recognizing them as companies or associations.

Research Questions:

1. How do DAOs differ from traditional corporations and legal entities, and what are their key characteristics?


2. How have selected legal systems (Iran, Shia jurisprudence, the United States, the EU, Switzerland, and Singapore) addressed or defined the legal nature of DAOs?


3. What legal challenges arise concerning ownership structures and control mechanisms in DAOs, particularly regarding token-based voting and power concentration?


4. What are the primary regulatory obstacles preventing DAO recognition under current legal frameworks?


5. Can DAO governance mechanisms be reconciled with Islamic contracts and principles, such as mudaraba and shirka, or do they violate prohibitions like gharar?


6. What legislative reforms and regulatory approaches can be proposed to facilitate DAO recognition and oversight, particularly in Iran?

Methodology:
This study adopts a comparative and legal analysis approach, drawing upon academic literature, regulatory reports, judicial decisions, and religious jurisprudence. The research first defines DAOs and their operational mechanisms before analyzing their treatment in selected jurisdictions. By identifying commonalities and differences in regulatory perspectives, the study critiques existing gaps and proposes legal reforms. The ultimate goal is to provide a comprehensive, interdisciplinary assessment of DAOs that combines theoretical, jurisprudential, and practical perspectives, offering viable pathways for legal adaptation.

Definition of DAO and Its Characteristics:
A Decentralized Autonomous Organization (DAO) is an entity governed by computer code on a blockchain, operating without centralized management or traditional hierarchical structures. In a DAO, organizational rules are embedded as smart contracts on the blockchain, and its activities—such as decision-making, resource allocation, and action execution—are carried out autonomously and transparently according to these predefined rules. DAO members typically hold governance tokens, enabling them to participate in decision-making processes. Each token represents a vote or share in the organization’s governance, allowing members to influence the DAO’s direction through token-based voting. The outcome of this process can lead to the automatic execution of decisions, such as fund transfers or parameter modifications within the system.

Key Features of DAOs:

1. Decentralization – Decision-making power is distributed among token holders rather than being concentrated in a board of directors or executive management.


2. Autonomy – Many operational processes are executed automatically without human intervention, with code serving as the enforcement mechanism of collective decisions.


3. Transparency – All transactions and decisions are recorded on the blockchain and made publicly accessible, facilitating open oversight.


4. Global and Borderless Nature – DAO members can participate from anywhere in the world, requiring only internet access and a digital wallet, eliminating the need for formal registration procedures or compliance with geographic restrictions.


5. Democratic Governance – Every member has voting rights (usually proportional to token holdings) and can propose changes to policies or new initiatives, subject to community voting.

To better understand DAOs, they can be compared with traditional corporations. In a conventional joint-stock company, decision-making follows a hierarchical structure (board of directors, CEO, and shareholders with limited voting rights). Companies must be registered with a regulatory authority to attain legal personality and legitimacy. Conversely, DAOs do not require such registration and emerge organically through agreements among members in an online environment. Consequently, establishing a DAO generally avoids the time and costs associated with formal registration and regulatory compliance. Another advantage of DAOs is financial transparency and the ability to attract global investment without the regulatory barriers imposed on conventional financial entities. Additionally, in DAOs, every member directly participates in governance, whereas in traditional corporations, ordinary shareholders typically have limited influence over daily management decisions.

However, it should be noted that DAOs, unlike traditional legal entities, lack recognized legal personality under most legal frameworks. The legal personality granted to registered companies does not extend to DAOs, which are often viewed as collective agreements among individuals rather than independent entities under the law. This distinction creates both opportunities and challenges: on one hand, DAOs enable seamless global participation without regulatory constraints, but on the other hand, the absence of legal clarity introduces uncertainties regarding members' rights and liabilities. The following sections will explore these legal implications across different jurisdictions.

The Legal Nature of DAOs: A Comparative Analysis Across Different Legal Systems

Introduction

One of the fundamental legal questions surrounding Decentralized Autonomous Organizations (DAOs) is their classification under existing legal frameworks. Legal systems differ in their approach to defining and regulating DAOs, and in most cases, there is no explicit recognition of DAOs in statutory law. This section examines the legal status of DAOs in selected jurisdictions.

Iran

Currently, Iranian law does not provide any specific definition or legal provisions regarding DAOs. According to existing laws, the establishment of any collective entity for business activities requires adopting one of the legally recognized forms, such as commercial companies under the Commercial Code, non-commercial institutions, cooperatives, or non-governmental organizations (NGOs). For instance, if a group of individuals intends to start a joint business, they must register one of the corporate structures outlined in the Commercial Code. Failure to register a legal entity can result in legal consequences, including the lack of legal protection for transactions and the invalidity of the entity’s legal personality.

Since DAOs operate outside these formal structures and without registration, they are not recognized as legal persons under Iranian law. The absence of legal personality has several implications:

1. A DAO cannot enter into contracts, own property, or initiate or respond to legal claims in its own name; instead, all obligations and transactions are ultimately attributed to the individual members.


2. Members of a DAO may be considered partners under Iranian civil law. If multiple individuals jointly use their assets for profit without forming a legally registered company, their association may be interpreted as a civil partnership or an informal joint-stock company, in which all partners bear unlimited liability for obligations.

Iranian courts may classify DAOs under the framework of civil partnerships (Articles 571 and beyond of the Civil Code) or unregistered joint-stock companies, holding all members jointly and severally liable for the DAO’s debts and obligations. This interpretation aligns with certain common law approaches, such as the one discussed in U.S. case law (VOTER BEWARE! Personal Liability for DAO Token Holders for Voting? | Paul Hastings LLP).

Regulatory and Legal Challenges in Iran

The lack of regulatory oversight presents another challenge for DAOs in Iran. Because they are unregistered, they remain outside the supervision of regulatory bodies such as the Securities and Exchange Organization, the Central Bank, or the Ministry of Industry, Mine, and Trade. This creates a risk of abuse and fraud, as individuals might use the DAO structure to raise funds without adequate legal accountability. In its current state, Iranian law does not recognize DAOs as legitimate legal entities, treating them instead as informal agreements among individuals. Consequently, new legislation or innovative interpretations of existing laws are necessary to address the legal ambiguities surrounding DAOs.

Shia Jurisprudence (Imamiyyah Fiqh) and DAOs

Since Islamic jurisprudence (Shia Fiqh) is a primary source of Iranian transactional law, evaluating the legitimacy of DAOs from a Shariah perspective is crucial. Islamic contract law generally upholds the principle of freedom of contract, as long as agreements do not violate explicit Shariah prohibitions such as excessive uncertainty (Gharar), usury (Riba), or harm (Darar).

The Principle of Gharar (Prohibition of Excessive Uncertainty)

Gharar refers to significant uncertainty in a contract that may lead to disputes. The Prophet Muhammad prohibited transactions involving Gharar because extreme uncertainty can result in unfair losses. The key question is whether participation in a DAO constitutes a Gharar-based transaction. On one hand, DAOs aim for maximum transparency, as all rules are encoded and transactions are public. Participants enter with relative awareness of governance mechanisms and project risks. This can be compared to investing in a corporation, where shareholders understand that majority votes in general meetings may influence the company’s future. If uncertainty is inherent but reasonable (Gharar Yasir), it may be tolerable under Islamic contract law.

However, if a DAO has fundamental ambiguities—such as an incomprehensible codebase, hidden vulnerabilities, or a high risk of total asset loss due to smart contract flaws—it could be classified as excessive Gharar, rendering participation impermissible. The 2016 hack of The DAO project, which resulted in the loss of substantial funds, demonstrated how participants could face unpredictable risks. To mitigate concerns about Gharar, DAOs must prioritize clarity in governance rules and risk disclosures to ensure informed consent.

The Principle of Taslit (Ownership and Control over Property)

The Islamic legal maxim Al-Nas Musallitun Ala Amwalihim states that individuals have full control over their assets within Shariah limits. This principle upholds the freedom to invest in a DAO or transfer assets to a smart contract. However, the issue arises when DAO governance restricts members’ ability to access or withdraw their funds. If a DAO implements governance mechanisms that prevent minority members from retrieving their assets or enforces irreversible fund locks, this could challenge the principle of Taslit. Nevertheless, if participants knowingly accept these terms upon entry, it may not constitute an unjust deprivation of ownership rights.

DAOs and Islamic Business Contracts (Mudaraba and Shirkat)

Islamic finance recognizes various partnership models, some of which resemble DAOs. Mudaraba is a contract where one party provides capital while the other manages the business, sharing profits according to an agreed ratio. Shirkat (partnership) involves multiple parties pooling resources for joint investment and sharing profits and losses proportionally. DAOs with pooled funds and collective decision-making resemble Shirkat structures. If a DAO’s governance model aligns with Islamic rules on fair profit-sharing and loss distribution, it may be considered permissible under Islamic finance principles.

Conclusion

From both a legal and Islamic jurisprudential perspective, DAOs present unique challenges and opportunities. Iranian law currently does not recognize DAOs as legal entities, instead treating them as informal partnerships with unlimited liability. Meanwhile, Islamic contract law does not inherently prohibit DAOs, provided they avoid elements of Riba, Gharar, and unjust ownership restrictions. Future regulatory frameworks should consider new legal classifications for DAOs that balance the benefits of decentralization with investor protection and legal accountability.

Legal Status of DAOs: A Comparative Analysis Across Jurisdictions

United States

As the birthplace of numerous blockchain innovations, the United States encountered DAOs early on. At the federal level, no specific law has been enacted to regulate DAOs. However, regulatory agencies and state legislatures have engaged with the issue in various ways. The primary legal concerns in the U.S. revolve around the legal personality of DAOs, member liability, and securities regulations.

In the absence of specific legislation, DAOs in the U.S. are often treated as partnerships or unincorporated associations under common law principles ("VOTER BEWARE! Personal Liability for DAO Token Holders for Voting?" | Paul Hastings LLP). According to common law principles, any organized group of individuals engaging in collective profit-seeking activities without registering as a corporation may be deemed an implicit partnership. Consequently, DAO members may be regarded as general partners, subjecting them to unlimited and joint liability for the entity’s debts and obligations ("VOTER BEWARE! Personal Liability for DAO Token Holders for Voting?" | Paul Hastings LLP). This interpretation was reaffirmed in a recent action by the Commodity Futures Trading Commission (CFTC) in the Ooki DAO case, where the agency argued that DAOs, as decentralized unincorporated entities, could hold members who actively participate in governance liable for violations ("VOTER BEWARE! Personal Liability for DAO Token Holders for Voting?" | Paul Hastings LLP). Simply voting on DAO governance proposals could classify a member as an operator and thus make them legally accountable for the DAO’s regulatory breaches ("VOTER BEWARE! Personal Liability for DAO Token Holders for Voting?" | Paul Hastings LLP). In the CFTC v. Ooki DAO (2022) case, a federal court in California initially agreed with this interpretation and allowed prosecution of the DAO, although a default judgment was issued due to the absence of defense representation ("The New DAO Model: Legal Protections for Unincorporated For ...").

Moreover, in the recent private lawsuit Samuels v. Lido DAO (2024), a California district court adopted a similar rationale. The court dismissed the defendants’ motion, holding that the plaintiff had plausibly alleged that the DAO was a general partnership and that major token holders could be held liable as partners ("DAOs Watch Out: Federal Court in California Decides a DAO Can Be a General Partnership" | Winston & Strawn). The court applied the standard of "meaningful participation in DAO governance" to determine partnership status ("DAOs Watch Out: Federal Court in California Decides a DAO Can Be a General Partnership" | Winston & Strawn). This emerging legal precedent suggests that, in the absence of formal registration and legal recognition, DAOs in the U.S. are likely to be treated as partnerships, exposing members to personal liability.

State-Level Legislative Developments

At the state level, some jurisdictions have taken innovative legislative steps. In 2021, the state of Wyoming enacted a law recognizing DAOs as a form of limited liability company (LLC) ("DAO Legal Landscape: An Overview of Challenges & Approaches"). Under Wyoming law, a DAO may obtain LLC status upon registration with the state’s corporate authority, provided it submits articles of organization specifying that it operates through a smart contract. This initiative offers benefits such as limited liability for members and the ability to conduct transactions in the DAO’s name. Other states, including Tennessee and Utah, have explored similar legislative measures. However, while these state-level laws confer local legal personality, their recognition by other states and federal authorities remains limited. For instance, a DAO registered as an LLC in Wyoming might still be treated as a partnership under federal law if its activities fall under federal jurisdiction.

Securities Law Considerations

Another critical issue in the U.S. concerns securities laws. The Securities and Exchange Commission (SEC), in its well-known 2017 report on The DAO, concluded that DAO-issued tokens constituted securities (a form of investment contract) and were thus subject to federal securities regulations ("SEC.gov | SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities"). The SEC emphasized that, regardless of nomenclature or technology, if an investment scheme involves pooling funds with the expectation of profit derived from the efforts of others, it qualifies as an investment contract under the Howey Test and must either be registered or qualify for an exemption under SEC rules ("SEC.gov | SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities"). This regulatory stance poses significant challenges for DAOs, many of which raise funds by selling governance tokens and promising profit participation. Consequently, any DAO whose token functions as an investment instrument must comply with SEC disclosure and registration requirements; otherwise, its token issuance may be deemed illegal. A notable example is The DAO project of 2016, which raised $150 million in Ether without SEC registration. After a hacking incident resulted in substantial financial losses, the SEC intervened and classified the DAO’s tokens as securities ("SEC.gov | SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities").

Summary of the U.S. Legal Framework

In the absence of a dedicated federal framework, DAOs in the U.S. face legal uncertainties, particularly regarding their classification as partnerships and the associated personal liability risks for members ("VOTER BEWARE! Personal Liability for DAO Token Holders for Voting?" | Paul Hastings LLP). Some states, like Wyoming, have attempted to mitigate these risks by allowing DAOs to register as LLCs, but such measures remain inconsistent across jurisdictions ("DAO Legal Landscape: An Overview of Challenges & Approaches"). Meanwhile, financial regulators such as the SEC and CFTC actively apply existing securities and commodities laws to DAOs, often imposing penalties on non-compliant entities. As a result, DAOs currently operate in a legal gray area within the U.S., necessitating legislative action to provide clear recognition and liability protections. Recent efforts, including a legislative proposal by Wyoming senators in Congress and recommendations from legal scholars, indicate a gradual movement toward conditional recognition of DAOs within the legal framework.

Legal Status of DAOs: A Comparative Analysis in Different Legal Systems

European Union

As of now, the European Union has not enacted a comprehensive and unified regulatory framework for Decentralized Autonomous Organizations (DAOs). The Markets in Crypto-Assets Regulation (MiCA 2023), recently adopted, primarily focuses on regulating token issuance (such as stablecoins) and oversight of digital asset services, without directly addressing DAOs as organizations (DAO Legal Landscape: An Overview of Challenges & Approaches). Consequently, DAOs in the EU remain without a formally recognized legal personality, and their classification under existing legal frameworks remains uncertain.

However, DAOs are increasingly attracting attention in European policymaking circles. In 2023, Finland’s Minister of Communications, Timo Harakka, called for an EU-wide regulatory framework to recognize DAOs (DAO and Legal Structures: Legitimizing DeFi - EDSX - European Digital Assets Exchange). He emphasized that the emergence of new Web3 entities, including DAOs, has not been adequately reflected in existing legislation, and a unified EU standard would prevent regulatory fragmentation across member states (DAO and Legal Structures: Legitimizing DeFi - EDSX - European Digital Assets Exchange). His argument is that if each country defines or regulates DAOs differently, a detrimental regulatory competition may arise, disrupting the cohesion of the EU’s single market (Finnish Minister Calls for EU Law to Recognize DAOs). As a result, it has been suggested that the European Commission should take the lead in drafting legislative proposals on this matter (Finnish Minister Calls for EU Law to Recognize DAOs).

In 2022, the European Parliament published a study on Distributed Ledger Technologies, which recommended granting DAOs legal status, particularly in the DeFi (decentralized finance) sector (DAO and Legal Structures: Legitimizing DeFi - EDSX - European Digital Assets Exchange). The study even suggested that all crypto-assets should, by default, be classified as transferable securities unless proven otherwise, thereby subjecting them to strict regulatory oversight (DAO and Legal Structures: Legitimizing DeFi - EDSX - European Digital Assets Exchange). While this approach is stringent, its key aspect is the recognition of DAOs as legal entities capable of operating within the formal financial system (DAO and Legal Structures: Legitimizing DeFi - EDSX - European Digital Assets Exchange). Overall, the EU appears to be moving towards analyzing and potentially regulating DAOs, though these efforts remain in their early stages.

At the national level within European countries, various legal approaches may be taken. Some jurisdictions might classify DAOs under the concept of non-profit associations (similar to the Swiss approach, discussed later) or consider them as civil partnerships. However, most civil law systems in Europe (including France and Germany) require formal registration for any collective entity to obtain legal personality, which spontaneous DAOs do not undergo. Consequently, DAOs operating in Europe often need to establish intermediary legal entities (such as registered companies or foundations) to conduct official activities like contracting with businesses or hiring employees. Otherwise, DAOs remain in a legal gray area, exposing their members to risks of personal liability or lack of legal recognition as contractual counterparties.

A major challenge for DAOs in the EU is determining jurisdiction and applicable law. Since DAOs have globally dispersed members, if a dispute arises among members or with a third party, it is unclear which country has jurisdiction. In the EU, due to the lack of DAO registration, traditional jurisdictional principles (such as company registration location or principal place of business) do not apply. Jurisdiction might be based on the residence of defendants (members) or the location where the harmful act occurred (in cases of liability claims). This legal uncertainty complicates predictability in dispute resolution. Therefore, some experts have suggested that new regulations should require DAOs to establish a legal domicile or specific jurisdictional affiliation to clarify legal standing and facilitate identification (DAO and Legal Structures: Legitimizing DeFi - EDSX - European Digital Assets Exchange).

In summary, the current status of DAOs in the European Union is as follows: they are not explicitly defined in laws; recent regulations such as MiCA have not addressed them (DAO Legal Landscape: An Overview of Challenges & Approaches); however, initial discussions on regulation have commenced, and legal frameworks are likely to emerge in the coming years. Until then, European DAOs often resort to registering legal entities in blockchain-friendly jurisdictions (such as Switzerland, offshore territories, or certain U.S. states) to gain formal recognition. A key challenge for the EU is deciding whether to define DAOs as a new legal entity or to fit them into existing legal categories (companies, partnerships, associations). Each approach has its implications. The prevailing trend appears to favor the creation of a distinct legal framework for DAOs, as their unique characteristics make adaptation to traditional structures challenging (DAO and Legal Structures: Legitimizing DeFi - EDSX - European Digital Assets Exchange). Whatever decision the EU makes, given its regulatory influence, it is likely to serve as a model for other jurisdictions worldwide.

Switzerland

Switzerland, known for its progressive approach to blockchain regulation and as the host of major crypto projects (such as the Ethereum Foundation), has become a focal point for DAOs. While Swiss law does not explicitly recognize DAOs, existing legal structures offer pathways to grant them legal personality (DAO Legal Landscape: An Overview of Challenges & Approaches). The two most commonly used structures are Swiss associations and Swiss foundations.

Under the Swiss Civil Code, an association is a group of individuals pursuing a common purpose that can obtain legal personality through a written charter and without requiring initial capital, provided that it has a non-commercial purpose (i.e., does not distribute profits among members). Many decentralized projects, including some DAOs, have adopted this structure because of its flexibility in representing a collective entity. A DAO operating as an association gains independent legal personality, allowing it to enter contracts, own assets, and engage in litigation (DAO Legal Landscape: An Overview of Challenges & Approaches). Internally, the DAO’s governance mechanisms (such as token-based voting and smart contract execution) can be defined as part of the association’s decision-making process.

A Swiss foundation is another viable option, utilized by some major DAOs. A foundation in Switzerland is an independent legal entity created by founders who allocate assets to fulfill a specific purpose. It has no shareholders or owners and operates under government oversight. In the blockchain sector, foundations are often used to manage project treasuries (e.g., token reserves) and develop ecosystems. A notable example is the Ethereum Foundation in Switzerland. A DAO can establish a foundation and transfer its treasury to it, thereby combining decentralized governance with formal legal recognition (Swiss Foundation as a DAO Legal Wrapper: What You Need to Know) (DAOs: Looking for Limited Liability & Legal Personality - O'Melveny). In this model, the DAO retains decision-making power in practice, while the Swiss foundation serves as its legal entity, providing benefits such as limited liability and the ability to interact formally with banks and governments (DAOs: Looking for Limited Liability & Legal Personality - O'Melveny).

Despite these practical solutions, Swiss law does not explicitly recognize DAOs, and an unregistered DAO may be treated as a simple partnership (Switzerland and DAOs: Legal Possibilities and Challenges | SIGTAX). In Swiss law, a simple partnership is a contractual arrangement between individuals without separate legal personality, meaning that members bear unlimited liability and the DAO cannot contract or litigate under its own name (Switzerland and DAOs: Legal Possibilities and Challenges | SIGTAX). Some Swiss legal scholars have suggested that DAOs could be recognized under Swiss private international law as foreign companies, provided they are sufficiently organized and domiciled in a jurisdiction that grants them legal status (Switzerland and DAOs: Legal Possibilities and Challenges | SIGTAX). This approach is complex and remains theoretical.

In summary, while DAOs are not inherently legal entities in Switzerland, existing flexible legal structures allow them to adopt forms such as associations or foundations to gain legal recognition (DAO Legal Landscape: An Overview of Challenges & Approaches). For international DAOs, Switzerland has become an attractive jurisdiction due to its clear rules for associations and foundations and its generally favorable stance toward emerging technologies. However, purely online DAOs that lack formal registration face legal uncertainties, similar to other jurisdictions (Switzerland and DAOs: Legal Possibilities and Challenges | SIGTAX). Looking forward, Switzerland may introduce a specific DAO or "decentralized company" law, as suggested by a draft model law proposed by legal researchers in Geneva ([PDF] Towards Legal Recognition of Decentralised Autonomous). However, formal legislation remains pending.

Legal Status of DAOs in Singapore

Singapore, as a major fintech hub in Asia, has gained a reputation for its pragmatic approach to blockchain technologies. However, as of now, there is no specific legal framework for DAOs in Singapore, nor have there been significant judicial precedents addressing their legal status (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). In general, it is expected that Singapore, like other jurisdictions, will not recognize DAOs as independent legal entities in the absence of formal registration (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). From the perspective of corporate law, a DAO cannot be classified as a company since, under Singapore's Companies Act, companies must be formally incorporated and registered (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). DAOs lack a registered constitution and official directors, thus falling outside the scope of the Companies Act (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post).

The closest legal classification for DAOs in Singapore might be a partnership or an unincorporated association, but both categories present challenges. Under Singapore’s Partnership Act, a general partnership can have a maximum of 20 members; exceeding this limit requires registration as a company (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). Since DAOs typically have dozens or even hundreds of members and issue governance tokens that can be freely traded, they often exceed this threshold (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). Therefore, DAOs cannot be easily classified as partnerships because their membership size and structure contradict the traditional partnership framework, which imposes restrictions on share transfers (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). Consequently, DAOs are more likely to be regarded as unregistered associations under Singaporean law (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). Unregistered associations lack legal personality and are merely a collection of individuals acting together. Singaporean law specifies that such associations cannot enter into contracts, sue, or be sued in their own name; instead, claims must be brought against individual members (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). Practically speaking, plaintiffs would likely target individuals who have actual control over the DAO, such as multi-signature key holders who manage treasury funds or upgrade smart contracts (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post).

Singapore has historically taken a proactive regulatory approach to attract innovative businesses, exemplified by its Payment Services Act (PSA) of 2019, which governs cryptocurrency transactions. It is expected that Singapore will eventually introduce regulations addressing DAOs as well. Currently, the Monetary Authority of Singapore (MAS) has not directly referenced DAOs in its regulatory guidelines, but any DAO engaged in regulated financial activities—such as decentralized exchanges or lending protocols—would be subject to existing financial laws. For instance, if a DAO operates a trading platform resembling a securities exchange, MAS may argue that its operators are running an unauthorized exchange, akin to the U.S. CFTC’s case against the Ooki DAO (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post).

In practice, many blockchain teams in Singapore establish a private limited company (Private Ltd) or an equivalent foundation company to serve as the legal arm of the DAO (DAOs: Looking for Limited Liability & Legal Personality - O'Melveny). This entity is responsible for signing contracts, opening bank accounts, and handling tax matters, while governance decisions remain decentralized within the DAO. This structure provides a legal shield for DAO members and enables real-world business interactions. Singapore also offers a legal entity known as a Company Limited by Guarantee (CLG), which functions similarly to a foundation—being non-shareholding and non-profit-oriented—making it an attractive option for non-commercial DAO initiatives.

Conclusion:
In Singapore, DAOs currently lack a conventional legal framework, and their members face unlimited personal liability unless a legal wrapper, such as a company or foundation, is established (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). To mitigate legal risks, many DAO projects resort to incorporating entities that provide legal recognition and protection. Given Singapore’s regulatory foresight, it is likely that authorities will clarify their stance on DAOs in the near future, possibly by adopting a regulatory sandbox model to test DAO governance under controlled conditions. As a leading technology hub, Singapore is expected to be one of the first Asian jurisdictions to develop a formal legal framework for DAOs.

Ownership and Control in DAOs: Challenges of Token-Based Voting and Power Concentration

The mechanisms of ownership and control in Decentralized Autonomous Organizations (DAOs) differ significantly from traditional corporate structures, introducing novel legal complexities. In conventional companies, ownership is determined by shares, and control is exercised by appointed directors, with shareholders typically having limited oversight roles. Fiduciary duties are imposed on directors to protect shareholders and the corporation. In DAOs, however, the boundary between ownership and management is blurred: token holders simultaneously own a proportional share of DAO assets and participate directly in governance. While this direct democracy is appealing, it presents several legal and governance challenges, as discussed below.

1. Power Concentration and the Role of “Whales”

Despite DAOs' idealistic goal of distributing decision-making power among all members, in practice, token distribution is often imbalanced. A small number of large token holders—so-called "whales"—can effectively determine voting outcomes (Whales, Sybil attacks, and low trust: Can DAOs avoid centralization pitfalls?). Studies reveal that in many DAOs, fewer than ten addresses control the majority of voting power (Whales, Sybil attacks, and low trust: Can DAOs avoid centralization pitfalls?). For example, governance participation in DeFi platforms like Compound or Uniswap is significantly skewed, with major investors exerting disproportionate influence over governance decisions (Whales, Sybil attacks, and low trust: Can DAOs avoid centralization pitfalls?). This phenomenon shifts DAOs from democracy to plutocracy, where wealth dictates governance.

A key legal implication is the potential for whales to prioritize their interests at the expense of smaller token holders, potentially leading to unfair asset allocation or high-risk investments. Traditional corporate laws provide minority shareholders with protections against oppressive decisions, but DAOs lack such legal safeguards. If dominant token holders collude to implement decisions unfavorable to the broader community, dissenting members have limited recourse apart from selling their tokens and exiting the DAO. Addressing this issue requires governance innovations, such as capping individual voting power or implementing identity-based voting rather than token-weighted voting—though these measures introduce their own technical and philosophical challenges (e.g., identity verification contradicts DAOs' borderless and pseudonymous nature).

2. Low Participation and Inefficient Decision-Making

Contrary to initial assumptions, many DAOs suffer from low voter turnout (Paradox of Power: How DAOs Struggle with Centralization and Ineffective Leadership - Tiger Brokers). Typically, only a small fraction of token holders participate in voting, leading to governance decisions made by a minority. This raises legitimacy concerns and increases the risk of biased outcomes, as a small group can disproportionately influence decisions.

From a legal standpoint, this issue parallels quorum requirements in corporate governance. Companies typically require a quorum of shareholders to validate meetings and decisions, whereas DAOs often lack such thresholds, enabling decisions to pass with minimal participation. This may lead to disputes over whether a decision genuinely represents the DAO’s collective will. Moreover, prolonged voting periods and decentralized deliberation can hinder DAOs from responding swiftly to market dynamics, causing inefficiencies.

3. Lack of Individual Accountability and Legal Liability

In DAOs, decisions are collectively made, diminishing individual liability (DAOs: A New Rival to Traditional Legal Entities). In contrast, corporate directors owe fiduciary duties and can be held accountable for misconduct. But in a DAO, who bears responsibility for poor decisions? If a collective vote results in financial losses, individual members cannot typically be sued for their votes—except in rare instances, such as recent U.S. court cases where DAO members were deemed liable as unregistered general partners.

DAOs lack formal representatives who can be held accountable to third parties or even members themselves. Consider a scenario where a DAO enters a smart contract and later votes to breach its obligations—who is the liable party? The absence of identifiable legal entities complicates recourse for aggrieved parties (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). Some DAOs attempt to mitigate this issue by appointing a multisig committee, akin to a corporate board, to execute decisions. However, the legal responsibilities of these committees remain ambiguous.

4. Property Rights and Joint Ownership of DAO Assets

From a property law perspective, who owns assets held in a DAO treasury? On-chain, these assets belong to the smart contract address of the DAO. Without legal recognition, DAO members may be considered co-owners of the treasury proportional to their token holdings. However, this interpretation is contentious because transferring assets to a DAO often relinquishes individual control, leaving token holders with voting rights rather than direct ownership.

Some legal scholars liken DAOs to self-executing trusts, where the smart contract acts as a trustee managing assets on behalf of beneficiaries. However, because smart contracts lack legal personality, a more practical approach might be to treat DAO assets as jointly owned by members, governed by the DAO’s internal agreements. Courts analyzing this issue might conclude that DAO assets are co-owned, with governance decisions treated as joint owner resolutions. Yet, complications arise regarding membership changes: Does a departing member retain any claim to previous assets? What rights do new members have concerning past governance decisions?

5. Vote Manipulation and Sybil Attacks

Security concerns in token-based voting pose additional risks. A malicious actor could create multiple fake identities (Sybil attacks) or borrow tokens to temporarily sway a vote (flash loan attacks) (Whales, Sybil attacks, and low trust: Can DAOs avoid centralization pitfalls?). Several DAOs have experienced such manipulation, undermining trust in governance mechanisms.

From a legal perspective, manipulated votes may be deemed illegitimate and challenged. Traditional corporate elections are subject to regulatory oversight, restricting proxy voting or temporary share lending to prevent vote rigging. Some DAOs have introduced countermeasures, such as requiring token locking before voting or limiting new accounts from voting immediately. However, these solutions remain technical fixes rather than regulatory safeguards, as no legal framework currently criminalizes DAO vote manipulation.

Legal Challenges in Recognizing DAOs in Legal Systems

In addition to ontological discussions, the acceptance of DAOs within existing legal frameworks faces multiple challenges. Current laws are primarily designed for centralized and well-defined entities, making the unconventional structure of DAOs a novel issue for legislators and courts. This section reviews the most significant legal challenges concerning DAOs that are widely discussed across various jurisdictions.

1. Lack of Legal Personality and Its Consequences

As discussed in previous sections, DAOs lack distinct legal personalities in most countries (DAO Legal Landscape: An Overview of Challenges & Approaches) (Singapore - Cryptoassets - Law Over Borders - The Global Legal Post). This foundational issue leads to several complications. When a DAO cannot enter into contracts in its own name, the enforcement of obligations becomes problematic. If a DAO purchases goods but fails to make payments, whom should the seller sue? If a DAO executes a project that causes damages to third parties—such as a financial protocol collapse resulting in user losses—how can victims seek compensation?

The common response is that claimants should pursue individual DAO members. However, identifying these members (who might be anonymous or vast in number) is a significant challenge. Moreover, not all members play equal roles; some are active and influential, while others are merely passive investors. Traditional legal principles are not equipped to address such complexities. The consequence is insufficient protection for third parties interacting with DAOs. Essentially, DAOs operate in a legal vacuum where they lack both the benefits (such as the ability to initiate lawsuits) and constraints (such as structured bankruptcy or liquidation processes) of legal personality.

This legal uncertainty discourages many businesses and individuals from engaging with DAOs. Some legal scholars suggest that granting DAOs a limited form of legal personality—such as recognizing them as “legal partnerships” with limited member liability—could mitigate this issue (Decentralized Autonomous Organizations Explained | World Economic Forum). Until such a framework emerges, DAOs must rely on creative legal solutions, such as forming an LLC in the U.S. or registering as an association in Switzerland, to ensure safer operations.

2. Non-Compliance with Registration and Transparency Requirements

Most commercial laws require organizations to register formally and fulfill transparency obligations, such as providing articles of incorporation, listing directors and addresses, and disclosing financial statements. However, DAOs, due to their decentralized nature, often do not meet these requirements or actively resist compliance. For instance, a DAO lacks a fixed address, identifiable managers, or traditional financial record-keeping.

This creates regulatory challenges, particularly for governmental oversight agencies. Consider tax authorities or anti-money laundering (AML) regulators—they typically monitor registered companies with identifiable legal representatives. In contrast, a DAO might only have a website and a smart contract address. International bodies such as the Financial Action Task Force (FATF) have warned that DAOs could facilitate AML circumvention and recommended that DAOs adhere to Know Your Customer (KYC) and transaction reporting standards (DAO Legal Landscape: An Overview of Challenges & Approaches). However, enforcing such rules on a decentralized entity is difficult—who within the DAO is responsible for implementing KYC when no central authority exists?

Governments often attempt to hold key participants accountable, such as project founders or contract signatories, treating them as compliance enforcement points. While this approach contradicts the intended trustless nature of DAOs, regulators currently have no alternative. Consequently, DAOs present a regulatory conundrum: their lack of formal registration creates practical difficulties for enforcing mandatory laws related to taxation, AML, and consumer protection. A potential future solution is requiring DAOs engaging with the public to designate an official legal representative or intermediary responsible for compliance.

3. Jurisdictional Ambiguity and Applicable Law

The transnational nature of DAOs raises questions about applicable laws. If a dispute arises between DAO members or between a DAO and a third party, which jurisdiction applies? By default, no national law explicitly governs DAOs since they are not tied to any specific state.

In some cases, DAOs define governing law in their terms of service or smart contracts, opting for arbitration or a specific jurisdiction. However, many DAOs do not establish such provisions. In their absence, traditional conflict-of-law principles provide little clarity. Potential criteria include the location of key members, primary servers/nodes, or the place where contractual effects occur. However, such determinations are difficult in a decentralized network.

This legal uncertainty leads to two potential outcomes: multiple courts may claim jurisdiction and issue conflicting rulings, or conversely, no court may assert jurisdiction, leaving claimants without recourse. Addressing this ambiguity requires either international legal coordination (e.g., a treaty recognizing DAO jurisdiction) or national laws with extraterritorial reach. The U.S., for instance, has attempted to assert jurisdiction over crypto-related entities using the “Effects Test,” claiming authority over activities impacting U.S. interests. Similarly, the European Union has introduced digital regulations asserting jurisdiction over DAOs that affect EU consumers.

4. Investor and Consumer Protection Issues

A fundamental role of commercial regulations is to protect uninformed individuals from excessive risk through disclosure requirements, enforcement mechanisms, and compensation funds. Given DAOs’ democratic and community-driven image, they attract large numbers of retail participants who may be unaware of risks such as smart contract hacks, extreme token volatility, or treasury mismanagement.

In traditional finance, if a company goes bankrupt or engages in fraud, victims can file for bankruptcy protection or seek redress through insurance schemes. However, in a DAO collapse, no clear bankruptcy framework exists. Members may find their tokens worthless and DAO assets inaccessible.

This has raised regulatory concerns that DAOs provide a loophole to evade investor protection laws. Lawmakers may respond by either restricting public participation in high-risk DAOs (e.g., limiting investment to accredited investors) or imposing transparency and auditing obligations similar to corporate disclosure requirements (Decentralized Autonomous Organizations Explained | World Economic Forum). However, enforcing such requirements on DAOs is challenging without voluntary compliance mechanisms.

Currently, some platforms offer DAO health indicators, evaluating governance decentralization, treasury transparency, and other risk factors (Decentralized Autonomous Organizations Explained | World Economic Forum). These voluntary rating systems could serve as an interim solution until regulatory frameworks emerge.

5. Taxation and Accounting Issues

Determining tax liability for DAO revenues and transactions remains unresolved. Should a DAO pay corporate taxes? If DAOs lack legal personality, tax liability falls on members. However, with global membership, should each participant pay taxes in their own country based on DAO profits? If a DAO generates revenue, is it immediately taxable for members, or only upon withdrawal?

Such uncertainties highlight the difficulty of applying traditional tax rules to DAOs. In some jurisdictions, tax authorities may track fiat-crypto conversions to impose taxes on individual participants. In Iran, for instance, corporate income is taxed, but without legal personality, the tax burden could shift to individuals. However, in the decentralized crypto space, enforcement remains challenging, raising concerns about potential tax evasion through DAOs.

6. Labor and Social Security Compliance

Some DAOs function similarly to companies, offering services and employing individuals (e.g., developers and contributors). Are these individuals considered DAO employees? If so, who is the employer, and how are benefits such as insurance handled?

Most DAO contributors are treated as independent contractors receiving payments from DAO treasuries. However, resolving disputes over compensation or work conditions within DAOs remains a legal challenge.

Conclusion: Regulatory Adaptation or Evolution?

As evident, DAOs currently do not align with conventional legal frameworks. This misalignment is bidirectional: DAOs pose risks to legal order (e.g., liability evasion, regulatory arbitrage), while legal uncertainty stifles legitimate DAO projects by deterring investors and restricting innovation (Decentralized Autonomous Organizations Explained | World Economic Forum).

To address these issues, smart regulation (RegTech) is required. Some countries have adopted regulatory sandboxes—controlled environments where emerging technologies can be tested under supervision. A DAO sandbox could allow legal experimentation while collecting data for future legislation.

Additionally, self-regulatory initiatives, such as DAO industry standards, may enhance compliance and credibility. Organizations like DAOstack and Aragon are already developing governance frameworks for fair DAO operations.

Ultimately, two regulatory paths exist: either adapting existing corporate laws to incorporate DAOs (e.g., modifying company laws to recognize DAOs as a special entity) or creating an entirely new legal category (as Wyoming has done) (DAO Legal Landscape: An Overview of Challenges & Approaches). Regardless of the approach, a transition from the current legal vacuum is necessary. As stated in a European Central Bank report, DAOs require legal recognition to reach their full potential, including rights to contract, asset ownership, and limited liability (The Future of DAOs in Finance - In Need of Legal Status). Conversely, DAOs must acknowledge that sustainable interaction with society necessitates adherence to fundamental legal principles such as accountability, transparency, and compliance with essential regulations.

Conclusion and Reform Proposals

Conclusion:
The conducted study reveals that DAOs, as an emerging phenomenon, stand at the intersection of law and technology, presenting both unprecedented opportunities and challenges for legal systems. DAOs have the potential to enable global collective participation, enhance transparency in decision-making, and eliminate centralized intermediaries (Decentralized Autonomous Organizations: The New Legal Entity?). Consequently, from an economic and social development perspective, DAOs hold significant promise. However, at the same time, their ambiguous legal nature and lack of compatibility with existing regulatory frameworks pose substantial risks, including unlimited liability for members (VOTER BEWARE! Personal Liability for DAO Token Holders for Voting? | Paul Hastings LLP), uncertainty in enforcing obligations and resolving disputes, potential misuse for regulatory evasion (e.g., money laundering) (DAO Legal Landscape: An Overview of Challenges & Approaches), and lack of protection for small stakeholders. This situation necessitates proactive legislative measures and legal reforms to address these issues.

A comparative study of various legal systems indicates that different jurisdictions have adopted fragmented approaches: certain U.S. states, such as Wyoming, have recognized DAOs as a form of LLC (DAO Legal Landscape: An Overview of Challenges & Approaches); in the European Union, initial discussions on recognizing DAOs have begun, though no specific laws have been enacted yet (DAO and Legal Structures: Legitimizing DeFi - EDSX - European Digital Assets Exchange) (DAO Legal Landscape: An Overview of Challenges & Approaches); Switzerland, through its flexible laws on associations and foundations, has provided a relatively favorable environment for DAOs, though it lacks explicit legal recognition (DAO Legal Landscape: An Overview of Challenges & Approaches); Singapore, as a pioneering fintech hub, has yet to take an official stance but is expected to develop optional registration mechanisms for DAOs. Iran’s legal system remains unfamiliar with DAOs, leaving a significant regulatory gap. Islamic jurisprudence (Shia fiqh) does not inherently obstruct this innovation, as principles such as the presumption of validity in transactions (asalat al-sihha), the principle of ownership (taslit), and freedom of contract allow for the adaptation of DAOs to Islamic legal norms, provided conditions such as the absence of excessive uncertainty (gharar) and the maintenance of fairness in participation are met. Hence, the fundamental legitimacy of DAOs within the Islamic legal framework is conceivable, with the primary challenge lying in their legal structuring within the legislative system.

Reform Proposals:
Based on the findings of this research, the following recommendations are proposed for the Iranian legal system (and more broadly for other jurisdictions) to constructively engage with DAOs:

1. 
   

   Amending Commercial Law and Recognizing a New Type of Entity: Legislators can draw from international experiences to define a new legal entity tailored for decentralized organizations operating on smart contracts. For instance, a dedicated chapter in the Commercial Code titled "Decentralized Autonomous Companies" could outline the formation, governance, and dissolution of such entities. Under this framework, DAOs could gain limited legal personality through minimal registration (e.g., submission of an organizational charter specifying smart contract addresses and governance mechanisms). Member liability could be limited to their financial contributions, thereby mitigating the risk of unlimited liability. Additionally, a mechanism for DAO legal representation could be established to handle registration and litigation processes. This measure would provide DAOs with legal clarity and a framework for responsible operation, preventing their existence in a legal vacuum. However, regulations should not be overly stringent, lest they undermine the advantages of DAOs—certain bureaucratic requirements applicable to traditional companies (e.g., official newspaper publications, in-person general assemblies) could be replaced with digital reporting mechanisms.

   
   


2. 
   

   Introducing an Optional Registration System for Foreign DAOs: Until comprehensive regulations are enacted, an administrative procedure could be established to allow foreign or informal DAOs to optionally register and obtain legal identifiers in Iran. This could be structured similarly to "special civil partnerships" under the Company Registration Office. Through voluntary registration, DAOs would be required to appoint a local representative and commit to complying with Iranian laws in exchange for permission to conduct business (e.g., fundraising from Iranian investors or contracting with Iranian companies). This approach resembles Branch Registration for foreign corporations, but with the distinction that the primary entity remains virtual. Such a system would facilitate lawful interaction between DAOs and the formal economy.

   
   


3. 
   

   Revising Capital Market and Financial Regulations: Regulatory bodies such as the Securities and Exchange Organization and the Central Bank should explicitly define the status of DAO governance tokens. For example, clarification is needed on whether issuing DAO tokens with profit-sharing expectations constitutes a security offering subject to securities laws. Similarly, should platforms trading DAO tokens require regulatory approval? A nuanced approach could exempt small-scale DAOs (below a certain capitalization threshold and participant count) from stringent regulations while subjecting larger DAOs to capital market oversight. This approach mirrors the U.S. Regulation D, which exempts small startups from SEC registration while imposing requirements on larger issuances.

   
   


4. 
   

   Publishing Islamic Legal Guidelines and Seeking Religious Rulings: To ensure compliance with Islamic principles and address potential legal barriers, formal religious inquiries (istifta) should be made to leading Islamic scholars regarding DAO participation and the validity of transactions conducted through DAOs. By explaining the nature of DAOs and seeking clarification on their legitimacy, it is likely that most scholars would approve their operation under specific conditions (analogous to modern corporate structures). Obtaining such rulings and incorporating them into legal frameworks or regulatory guidelines would help preempt challenges from the Guardian Council (which ensures laws comply with Islamic principles). Additionally, advisory bodies such as the Islamic Financial Jurisprudence Committee could be tasked with evaluating DAO models and issuing guidance on conditions necessary to ensure compliance with Islamic financial principles.

   
   


5. 
   

   Establishing a Regulatory Sandbox for Iranian DAOs: Relevant authorities (e.g., the Vice Presidency for Science and Technology, in collaboration with the Central Bank and the Ministry of Economy) could create a Regulatory Sandbox where selected Iranian DAOs (or startups planning to launch DAOs) operate under controlled oversight. These DAOs could be permitted to raise limited public funds or implement projects while periodically reporting to regulators and refining their governance structures. This initiative would generate empirical insights, ultimately informing the drafting of comprehensive DAO regulations.

   
   


6. 
   

   Public Awareness and Legal Education: Given the novelty of DAOs, many individuals may engage with them without fully understanding the associated risks. Regulatory agencies (such as the Securities Organization for token issuance and financial authorities) should issue clear public advisories, warning potential participants that "DAO involvement entails the risk of complete capital loss and is not legally guaranteed." This transparency would prevent confidence crises akin to past Ponzi scheme collapses. Furthermore, training programs for judges and legal professionals on DAO-related disputes are essential to ensure the judiciary is prepared for emerging cases.

   
   


7. 
   

   Encouraging Self-Regulation in the Blockchain Community: Governments could facilitate the formation of industry-led self-regulatory organizations (SROs) for DAOs, where voluntary DAO participants adhere to best practices such as smart contract audits, fraud-resistant voting mechanisms, treasury insurance, etc. This association could issue certifications to compliant DAOs, signaling credibility to investors. Soft governmental support (e.g., legal recognition or financial incentives) for such initiatives could reduce the burden of direct regulation while improving ecosystem integrity.

   
   

Final Remarks

In conclusion, the technology-driven nature of DAOs necessitates a nuanced and flexible legislative approach. A purely conservative stance risks stifling innovation, while an entirely unregulated environment leaves stakeholders vulnerable. Just as corporate entities and the internet were once novel and required legal adaptation, DAOs are likely to gradually secure their place within legal systems. Iran, with its young and tech-savvy population, has the opportunity to be a regional leader in embracing decentralized governance models. This paper has sought to lay the theoretical and comparative groundwork for such developments. Moving forward, the engagement of legislators, legal scholars, and the tech community will be crucial in shaping a legal framework that balances public interest with technological advancement, enabling DAOs to contribute positively to economic and social progress.