Thread by @moo9000, 1/ Your Thursday dose of #DeFi is hereToday we continue on the [...]

1/ Your Thursday dose of #DeFi is here

Today we continue on the topic of how to classify DAOs,
and what is the future of governance and blockchain investing.

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2/ If you are interested on this topic do NOT MISS WEBINAR TODAY

at 4:00 PM - 5:00 PM CEST

With

Peter Howitt, Managing Director at @incegordondadds Gibraltar
Vice President of Finance at @gnosisPM, Steven Borg
CEO of @KR1plc, George McDonaugh

https://bit.ly/36dV3NK ">https://bit.ly/36dV3NK&q...

3/ Today there are no funny fruits or investment advice.

Only LAW!

If you are here for the yield and chads you can skip reading this point
and go back to the merry business of @metamask_io MetaMask accept transaction pop-ups.

4/ We discuss governance tokens like $UNI and $SUSHI that give you
quasi-equity and revenue share in DAOs (Digital Autonomous Organisations).

Having them not falling under securities laws would make blockchain-based innovation
much easier.

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https://abs.twimg.com/emoji/v2/... draggable="false" alt="🍅" title="Tomate" aria-label="Emoji: Tomate"> fruits and law!

5/ Last week, 3 out of 3 leading crypto lawyers deemed that governance tokens are US securities https://twitter.com/moo9000/status/1307253289755586560">https://twitter.com/moo9000/s...

https://twitter.com/moo9000/status/1307253289755586560

6/ However there are dissents - the rows of the lawyer folk are not united.

For example, Philip Liu, the Chief Legal Officer or @arca, disagrees https://twitter.com/PhilipLiu/status/1308128547819548672">https://twitter.com/PhilipLiu...

https://twitter.com/PhilipLiu/status/1308128547819548672

7/ Bear the source criticism is mind. I have not done my research, but I bet my left kidney @arca has invested many of these not-securities and having more dividend-paying and voting rights on their non-securities investment would be beneficial for the fund.

8/ Also if we frame questions differently, what is there in $ETH mining or $DOT staking, which makes them no security, whereas $SUSHI and $CRV would be securities

Where do we draw the line?

This excellent point was brought up by @theblue_panda https://twitter.com/theblue_panda/status/1307362790575943681">https://twitter.com/theblue_p...

https://twitter.com/theblue_panda/status/1307362790575943681

9/ I will leave the United States for now. Because I have some good news.

Welcome to the EU. Your guardian of privacy and the defender of the man on the street.

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10/ As you might know, in the EU we do not have the infamous "Howey test" to tell what is a security or not. Howey test is purely a concept of Americaanos and was incidentally made into the case law in citrus yield farming.

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https://abs.twimg.com/emoji/v2/... draggable="false" alt="🍋" title="Zitrone" aria-label="Emoji: Zitrone"> https://www.investopedia.com/terms/h/howey-test.asp">https://www.investopedia.com/terms/h/h...

Howey Test

The Howey Test determines whether transactions qualify as "investment contracts." Transactions which qualify as investment contracts are considered securities, meaning that they are also subject to...

https://www.investopedia.com/terms/h/howey-test.asp

11/ Fractional ownership does not need to be a security under the EU.

Here are some good material to read (thanks for Peter Howitt for the tips):

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12/ FCA guidance regarding investment clubs

https://www.handbook.fca.org.uk/handbook/PERG/11.pdf

Perimeter">https://www.handbook.fca.org.uk/handbook/... Guidance

Chapter 11

Guidance on property investment clubs and land investment schemes

13/ Oxford University

Tokenisation – The Future of Real Estate Investment?

https://www.sbs.ox.ac.uk/sites/default/files/2020-01/tokenisation.pdf">https://www.sbs.ox.ac.uk/sites/def...

14/ Maecenas Launches New Tokenisation Vehicle

https://blog.maecenas.co/maecenas-launches-new-tokenisation-vehicle/">https://blog.maecenas.co/maecenas-...

15/ Fractionalized Art Ownership and Securities Law

Center for Art Law https://itsartlaw.org/2019/11/19/fractionalized-art-ownership-intersection-of-art-and-securities-law/">https://itsartlaw.org/2019/11/1...

Fractionalized Art Ownership and Securities Law

By Sophie Chung. In 2018, investors who put money into art saw an average gain of 10.6% according to the Wall Street Journal based on Art Market Research’s Art 100 Index.[1] While the numbers…

https://itsartlaw.org/2019/11/19/fractionalized-art-ownership-intersection-of-art-and-securities-law/

16/ The one very interesting question under the EU regime is that if there is management.

If there is management it quickly becomes a fund.

17/ But as you know, mostly DAOs operate under direct democracy rules and the governance token owners change the protocol by direct voting.

18/ Setting up a foundation or paying an external agency like a law firm to manage IP rights (Copyright, trademark), like in the case of @ethereum foundation,
should not break the management rule as far as I understand

19/ Also the foundation can pay salaries of accountants and developers.

It is easier tax-wise.

Most software developers are not interested in solving the problem of explaining a tax agent how they were paid by a magical internet smart contract

20/ So DAOs in the EU makes more sense than in the US currently.

If you are a token project the EU welcomes you.

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