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Will BVI Take the Lead in New Digital Assets Technology for Greater Global Investment?
  • POST ON 23 Apr 2021

This is according to forum facilitators and ID Theory founding partners, Graham Stanton, Chief Commercial Officer, and James Brodie, Chief Investment Officer whose presentation focused on the Decentralised Autonomous Organisation or DAO, and the Limited Liability Autonomous Organisation, or LAO.

Mr. Brodie said he believes that blockchain technology has produced the next “evolutionary” step for corporations, which he said has “facilitated the creation of new organisations like the DAO,” adding, “We believe this will be the next huge wave of innovation and adoption...which we perceive is the next evolution of the traditional corporation.”

“This evolution, we believe, presents a very attractive opportunity for the BVI to take a lead and to capitalise on what we believe will be new members and new organisations who want to utilise this technology.”

Mr. Stanton told attendees: “It’s important to state that we don’t see this technology as replacing corporations, in the same way email and the internet have not replaced the post office.”

He continued, “There will always be utility for corporations. This is just a new technology platform that will allow enterprises and businesses that were previously impossible via leveraging blockchain technology and taking advantage of all the efficiencies that that brings about.”

The DAO & LAO

The ID Theory team described the DAO as a group of smart contracts to automate decision-making and facilitate cryptocurrency transactions. The DAO allows members to pool funds, invest in projects and share proceeds from the investment. The DAO uses digital currency that is decentralised, not being controlled by a single institution like a government or central bank.

The DAO was introduced in 2016 by Ethereum, an open-source blockchain. The DAO raised over $150 million dollars, but was not successful due to bugs in the smart contract that allowed hackers to drain the investment. This led to the creation of the LAO which was organized since April 2020, as a Delaware limited liability company.

The LAO which brings together traditional legal agreements with smart contract-based governance mechanisms. The smart contracts handle the mechanics of voting, funding and allocation of collected funds. Members are also allowed to purchase interest. According to the facilitators, the LAO is “essentially a DAO with a sound legal wrapper”.

The DAO utilises tokens called “ETH” which are then pooled by investors for potential projects. A project proposal can then be voted on by investors. If a proposal is approved, the DAO automatically transfers ETH to the smart contract that represents the proposal.

DAO/LAO Benefits

The ID Theory duo opined that the LAO’s benefits include the very robust voting process, equal information sharing, and the “hive mind”.

On the information sharing, ID Theory team says that the equal information shared within a DAO represents a “true meritocracy”, and opined the “hive mind” is good for investments because of the variety of investors involved with niche skill sets. Important to note is that you are not locked into the DAO, as investors are allowed to withdraw or exit to prevent their funds from being invested.

DAO/LAO Opportunity for BVI

The ID Theory presentation indicated that Wyoming is “fully committed”, as evidenced by the creation of the DAO bill; an amendment under its existing LLC legislation. However, a challenge may be state involvement, such as the power to dissolve the DAO if any wrongdoing is suspected.

About Wyoming, Mr. Brodie commented, “The BVI has an opportunity to create a more compelling product”.

ID Theory notes that the BVI can take the lead in the DAO/LAO opportunity but lacks the clear legal framework and supportive regulatory structure in which to domicile. This includes an LLC statute, alongside a DAO amendment legislation.

Once the legislation is done for the BVI, Mr. Brodie said, “Reputationally, it will enhance the position of a forward thinking, digitally literate region and open up many related business opportunities.”

To watch the BVI Finance Breakfast Forum go to this link.

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