This proposal requests a legal budget for the 4th quarter of the 2021 fiscal year. This budget will be used to manage a list of legal needs for DXdao. The budgetary items include:
|Description||Cost (original currency)||Cost (USD conversion + transaction fees)|
|1.||Research on how DAOs can interface with territories and legal jurisdictions with Swiss firm, MME.||15,000 CHF||$16,278 +122 tx* = $16,400|
|2.||Legal opinion from UK firm, McDonnell Ellis, to address AML registration requirements for crypto currency entities.||3,000 £||$4,148 + 122 tx* = $4,270|
|3.||Blockchain analysis report and recommendations from Guidehouse of (1) DXD bonding curve purchasers, (2) REP holder addresses, and (3) Swapr token airdrop holders, AML program with recommendations. Guidehouse was recommended by Chainalysis.||Est. $10,000||Est. $10,000|
|4.||Ongoing retention of firm Polsinelli LLP.||Est. $5,000||Est. $5,000|
|5.||Miscellaneous.||Est. $3,000||Est. $3,000|
*tx: transaction costs, such as bank transfer fees and gas
This is an initial signal proposal for a Q4 legal budget. Not all funds will be requested at once on-chain. Instead, I will update this forum post as items are requested on-chain with additional specifics regarding the request and any changes in cost and conversion rates.
1. Research on How DAOs Can Interface with Territories and Legal Jurisdictions → MME
Founded as a decentralized on-chain organization, the DXdao community has chosen to operate without a legal entity. DXdao’s decentralization-first model is producing innovative governance tools that other DAOs have emulated and established a solid foundation for how we work.
As DXdao’s day-to-day operations grow, researching and exploring how DAOs interface with territorial jurisdictions becomes important. This research will explore legal structuring for DXdao’s contributors’ on-chain activities in the real world.
With DXdao’s commitment to decentralization in mind, @fluidrop and I contacted Swiss law firm, MME. Back in 2016, MME assisted the Ethereum Foundation in setting up its legal entity, and MME is now heavily researching legal structuring options for DAOs. Given MME’s experience and interest in blockchain law, the attorneys at MME will be a strong legal partner to explore how DAOs build organizational structures that can interface with real world territories and legal jurisdictions.
Once retained, MME will review DXdao’s governance, treasury, and products to provide an initial regulatory and tax analysis on how DXdao and its contributors can interface with the “Web2 world”. I will then workshop with MME to compile some research on DAO legal structuring options. This information will be shared with the DXdao and larger DeFi community to help others working in this space.
Cost: 15,000.00 CHF ($16,278 +122 tx* = $16,400)
2. Legal Opinion on United Kingdom Registration Laws → McDonnell Ellis
The United Kingdom Financial Conduct Authority has implemented registration requirements for entities and sole practitioners that engage in the issuance and / or exchange of crypto currencies. Given DXdao’s unique situation as a DAO, it’s necessary to obtain a legal opinion on whether there is any need to register under the new law.
McDonnell Ellis is a boutique financial services law firm that will review DXdao’s decentralized structure and technology to give a written opinion on whether the registration requirements may apply.
Cost: 3,000.00 £ ($4,148 + 122 tx* = $4,270)
3. Blockchain Analysis Report and Recommendations → Guidehouse
Guidehouse is an analytics and strategy consulting agency that Chainalysis referred to DXdao to complete a blockchain analysis and report of (1) DXD bonding curve purchasers, (2) REP holder addresses, and (3) Swapr token airdrop holders.
The report is necessary in order to continue to provide grants to projects and undergo efforts to not engage with or receive funds from any sanctioned persons on the UN OFAC sanctions lists. Guidehouse will also give recommendations on policies and procedures to be compliant with AML laws.
I’m still waiting to receive a final quote from Guidehouse.
Est. Cost: $10,000.00
4. Ongoing Retention → Polsinelli LLP
Polsinelli was first retained in April 2021 to assist with compliance and remediation questions in the United States. DXdao has an ongoing relationship with Polsinelli that has been useful to guide product strategy to date. Polsinelli has not sent a new bill from the initial $5,000 retainer, but it could be expected that the retainer may need to be refilled in the 4th fiscal quarter.
Est. Cost: $5,000.00
This item intends to cover any additional expenses that individual contributors will need covered regarding legal and compliance concerns during the 4th fiscal quarter.
Est. Cost: $3,000.00
Any comments and feedback on the Q4 Legal Budget proposal are appreciated.