This guide was built to help you understand the benefits of incorporating your DAO and how the process of DAO incorporation works. We help you answer questions like:
Why should I incorporate my DAO? In what geographic jurisdiction should I incorporate my DAO? What legal entity type should I choose?
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Welcome to the first installment of our three-part series, "Crypto Taxes for Your DAO." In this series, we’ll delve deep into the innovative world of Decentralized Autonomous Organizations (DAOs) and their unique tax implications. This first part explores the foundational concepts of DAOs and their potential to revolutionize how we perceive and interact with digital organizations. Join us as we embark on this enlightening journey with Adam Miller from MIDAO and Cameron Richard from Darien Advisors, shedding light on the transformative potential of DAOs.
Adam Miller: “Welcome to ‘Just DAO It,’ the podcast for people starting DAOs. I'm Adam Miller, CEO of Midao, providing legal entity solutions for DAOs. Prior to starting my own DAO, I consulted for others embarking on their DAO journey. This is our inaugural live episode on Twitter Space, and we're excited to see if we can publish this recording on our podcast feed. Let's begin with an introduction to our guest, Cameron. Could you share with us how you ventured into Web3 and your expertise in DAOs?”
Cameron Richard: “Hello, I'm Cameron Richard, Lead CPA and Partner at Darian Advisors. My journey in crypto began as a personal investor in 2015, and my professional involvement started around 2017-2018 with tax compliance for my clients. My deeper engagement reignited during the DeFi summer of 2020. An interesting tidbit: I received the UniSwap airdrop, a rare feat for a CPA.
This period marked significant growth and exploration in the realms of DeFi dApps, DAOs, and the broader crypto ecosystem. In May 2021, I established my first tax practice, Darian Advisors, which now serves over 500 clients, including DAOs, DeFi enthusiasts, NFT projects, and others in the crypto space. My journey has been a trial by fire, learning immensely from both personal experiences and my clients. So, in a sense, I'm deeply immersed in DAO life and have considerable expertise, though I prefer to see myself more as a counselor and advisor in this evolving field.”
DAOs have evolved from niche concepts to mainstream phenomena, signifying a significant shift in digital collaboration and governance.
Adam Miller: “Perfect! This episode marks a departure from our usual format. Instead of the standard DAO news segment and structured interviews, we're opting for a more freeform approach, aiming to make it more engaging and interactive. I'll also be more participatory than just a moderator. To kick things off, I'd like to share what excites me about DAOs, and then perhaps, Cameron, you can add your thoughts. Afterward, we'll delve into the timely topic of crypto taxes and DAO taxes, a highly relevant discussion, especially with tax deadlines approaching in the U.S.”
“I want to share a vision for the future of DAOs. Let's look at major technology innovations of recent decades, like Uber and Amazon. Uber transformed the transportation landscape far beyond just capturing a portion of the taxi market. They changed how people use ride-sharing, even in scenarios where taxis were never considered before. Similarly, Amazon redefined retail shopping, moving us away from traditional brick-and-mortar stores to a more streamlined online experience.”
DAOs challenge conventional business structures, introducing a dynamic, community-driven approach to decision-making and organization management.
“I believe DAOs will have a similar transformative impact in the next five years. We will see DAOs creating structured organizations in areas traditionally not organized in such a way, bridging gaps between individuals, families, friend groups, clubs, businesses, charities, and governments. This new structure will exist in spaces where we haven’t seen formal organization before. We're still exploring what this means, but I anticipate significant developments in the coming years. Cameron, do you share this vision for the future of DAOs? What excites you about them?”
Cameron Richard: “Absolutely, I share this enthusiasm for DAOs. My interest initially stemmed from environmental concerns. The concept of DAOs really clicked for me during a discussion about how natural features in India, like shrines, have their own governing bodies for management and fundraising. This led me to ponder the potential of applying legal personality to diverse entities and organizing them in novel ways.”
“DAOs are now being utilized for a variety of purposes, including community organization, specific ventures, crowdfunding, and decentralized social initiatives. These applications are often more flexible and inclusive than what can be achieved through traditional structures like 501(c)(3) organizations, LLCs, corporations, or cooperatives. Watching DAOs evolve and seeing their diverse applications has been both intriguing and inspiring.”
The integration of blockchain technology in DAOs presents a new paradigm for transparency and efficiency, reshaping how entities operate and engage with stakeholders.
“DAOs offer a different way to involve various parties, aligning their efforts with the overall mission of the entity. This shared governance model is fascinating to observe as it grows and develops across the board. What excites me about DAOs is this concept of having everything as code – where people vote on what the code is, and the code itself forms the bylaws of the structure. This approach departs from the more traditional models, like having a fixed quorum each quarter and a set number of shareholders who then present motions to a board of directors. DAOs represent a more fluid, futuristic way of thinking about and governing businesses and organizations in general.”
As DAOs grow in popularity, they also raise important questions about legal frameworks, challenging existing laws and prompting new regulatory considerations.
This concludes the first part of our comprehensive look at "Crypto Taxes for Your DAO." But the conversation doesn't end here. If you're eager to dive deeper into the world of DAOs and explore more about their tax implications, we've got just the thing for you. Tune in to our podcast, "Just DAO It," to get even more insights and expert opinions. Don't miss out on this opportunity to enrich your understanding of DAOs and stay ahead in this dynamic field.
Stay tuned for the second installment, where we will delve deeper into the tax implications and legal nuances of DAOs. As we continue to explore this evolving landscape, we invite you to join us in uncovering the intricacies of DAO governance and taxation. Remember, understanding the future of DAOs is crucial in navigating their complex yet fascinating world.