Is a DAO obliged to ensure compliance with laws and regulations?
Basically, a DAO is obliged to ensure compliance with laws and regulations, if it is subject to
obligations and can exercise rights. This is the case when the DAO can be regarded as a
legal entity. Whether a DAO can be regarded as a legal entity, depends on its structure,
mainly on the relationship between its members. According to German law, a DAO may qualify as a company, in particular as a civil law partnership (Gesellschaft bürgerlichen Rechts – GbR) or under certain circumstances as a general partnership (offene
Handelsgesellschaft – OHG).
However, qualifying as a legal entity does not mean that the DAO is automatically subject to
all relevant compliance regulations. It requires an assessment in each case whether a DAO falls within the scope of the respective law. In this regard it is a crucial aspect whether the law is addressed to a company (hence to the DAO) or only to the natural persons behind it (e.g. its members or members with a specific status). Even if the DAO cannot be regarded as a legal entity and is therefore not obliged to ensure compliance, it does not mean that no laws and regulations apply. In this case, basically the members of the DAO may be obliged to observe compliance with laws and regulations. At first sight it may not make much difference, but from a legal and practical point of view this question may have significant implications. E. g. if only the members are obliged to ensure compliance, laws and regulations which are addressed only to companies and not to natural persons, do not apply.
A DAO, as any entity (albeit without a clear legal
recognition) shall comply with any applicable law, but
it is not required to ensure compliance with laws and
regulations in itself. However, a case by case
evaluation is advisable in this regard, since mandatory
compliance undertakings may apply (e.g., product
compliance; data protection) depending on the
business sector it operates in; its internal organization
/ structure, etc..