PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

Are Decentralized Finance Platforms Exchanges?

Josh Einis by Josh Einis
June 16, 2023
in Analysts Coverage, Global Trade
0
Decentralized Finance: The Illusory Savior of the Underbanked

Decentralized Finance: The Illusory Savior of the Underbanked

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

A federal judge has ruled that a decentralized cryptocurrency collective, known as Ooki Decentralized Autonomous Organization (DAO), is liable for violating commodities exchange rules by running an unregistered trading platform. and will be required to pay a $643,542 fine, per the WSJ,.

The Ooki DAO, which operated on the Ethereum blockchain, allows users to invest and speculate on virtual currencies. The CFTC (Commodity Futures Trading Commission) argued that the protocol resembled a trading platform, qualifying it as an exchange under the Commodity Exchange Act.

State of California Judge William Orrick’s ruling in favor of the U.S. Commodity Futures Trading Commission (CFTC) provides a legal basis for regulators and private plaintiffs to sue DAOs. This ruling signals a growing trend in holding decentralized organizations accountable under existing laws.

Orrick determined that Ooki DAO qualified as an “unincorporated association” under California law and, consequently, as a “person” under the Commodity Exchange Act. Being recognized as a person means that the DAO can be held accountable for violating commodities exchange rules. However, the legal status of DAOs varies across different states, and while some states provide limited liability protection for unincorporated associations, others do not. More than likely, DAOs will move to where regulation is most favorable.

The practicality of enforcing the judgment against a DAO poses a significant challenge. DeFi protocols, including DAOs, aim to create autonomous financial systems governed by majority votes from members. While centralized exchanges like Binance and Coinbase have identifiable operators, DeFi protocols often have anonymous founders and members.

The recent ruling against Ooki DAO marks a significant step in the legal treatment of decentralized autonomous organizations. While providing a legal basis for regulators to hold DAOs accountable, the practicality of enforcement remains uncertain. It will be interesting to see if the fine will be paid, and by whom.

“The ruling against Ooki DAO is a new step in the evolution of the entire DAO idea,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research. “The default judgment against Ooki DAO may be difficult to enforce, since no individual was named in the suit, but it does establish that DAOs are liable as entities themselves.”

“‘Autonomous’ does not mean unregulated,” he added. “Where this could lead is members of DAOs—token holders or participants—being held collectively responsible for a DAO’s activities in the future. How courts and regulators deal with this concept, and truly hold DAOs accountable, will be interesting to watch.”

Tags: Decentralizeddecentrized financeplatformregulation
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    digital payments

    Mass A2A Payment Adoption in The U.S. Contingent on Compelling USP

    September 25, 2023
    cashless payments mobile

    The Synergy Between Cashless Payments and Seamless Mobile Coverage

    September 22, 2023
    The Power of AI and How its Transforming the Financial Landscape

    The Power of AI and How It’s Transforming the Financial Landscape

    September 21, 2023
    “You’re a Fintech, I’m a Legacy Bank – How Can We Collaborate?”

    Investing in Fintech: Opportunities and Challenges in the Payments Industry

    September 20, 2023
    real-time payments across the globe

    In 2023, Real-Time Payments Expanding Across the Globe

    September 19, 2023
    AI

    AI in EBPP: Small Changes, Huge Impacts

    September 18, 2023
    Amazon

    How Tech Is Changing the Checkout Process

    September 15, 2023
    fraud risk models

    Consortium Approach Dramatically Improves Fraud Risk Models

    September 14, 2023

    Linkedin-in Twitter

    Advertise With Us | About Us | Terms of Use | Privacy Policy | Subscribe
    ©2023 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    Menu
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • Recent News
    • Resources
    Menu
    • Industry Opinions
    • Recent News
    • Resources
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result