Corporate form ambiguity refers to the uncertainty surrounding the appropriate legal classification of novel organizational structures. This lack of clear definition often arises with entities that do not fit neatly into traditional corporate categories. It creates challenges for regulatory oversight, liability assignment, and governance frameworks.
Context
Corporate form ambiguity is a prominent issue for decentralized autonomous organizations (DAOs) and other blockchain-native entities. Regulators grapple with whether DAOs should be treated as partnerships, corporations, or entirely new legal constructs. This uncertainty complicates legal compliance, taxation, and the establishment of clear accountability for actions taken by these decentralized groups.
The judicial classification of a DAO as a general partnership fundamentally re-architects DeFi legal risk, imposing joint and several liability on participants.
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