XDAO Grants Legal Status to 367,000 DAOs, Streamlines Recognition Process

XDAO, a protocol built on The Open Network (TON), has successfully granted legal status to over 367,000 decentralized autonomous organizations (DAOs). This achievement is part of an initiative aimed at automating the legal recognition process for DAOs, making it more efficient and accessible.

According to an announcement by XDAO, the protocol has simplified the DAO creation process, allowing these organizations to attain legal status with greater ease. An XDAO spokesperson explained that the protocol provides a standard for various "sub-entities" within its legal framework. These sub-entities exist in relation to each other and to external entities that acknowledge their existence and agree to certain articles of the XDAO Labs’ Constitution.

XDAO has designated Singapore, where XDAO Labs is incorporated, as the primary jurisdiction for resolving any disputes that may arise. This move ensures that there is a clear legal framework in place for addressing any issues that DAOs might encounter.

The protocol also enables the signing of legally binding documents using Web3 wallets. DAOs can archive their transactions through a Telegram bot, which adds an additional layer of security and transparency to their operations. The spokesperson noted that agreements formed through the Telegram bot are recognized in "most jurisdictions," although there are limitations, such as real estate and securities, which require specific procedures for contract formation.

When it comes to smart contract-based compliance, XDAO has outlined a process for arbitration scenarios. Parties can form valid arbitration agreements through messenger or e-signature methods, such as Docusign and Ethsign. This requires that the parties' identities are firmly established and that there is a clear intention to adjudicate the dispute.

In cases where payment is required, an arbitrator can be added to the DAO with the right to a key vote. This allows the arbitrator to sign a transaction with their digital signature if the parties fail to reach a consensus, ensuring that disputes can be resolved efficiently.

This development marks a significant step forward in the legal recognition of DAOs, providing a framework that could pave the way for broader adoption and integration of decentralized autonomous organizations into mainstream legal and financial systems.