Finnland’s Communications Minister, Timo Harakka, has urged the European Union (EU) to recognize decentralized autonomous organizations (DAOs) and create legislation for them to govern Web3 applications. Harakka believes that this move will prevent the need for altering thousands of laws across different countries and stop competition between countries to attract innovative business. He acknowledged that the existing legislation does not reflect the new players and actors in the Web3 world and that centralized laws could prevent a shattering of Europe’s legal codes. However, he acknowledged that the European Commission, which is responsible for proposing new EU laws, had its eye on other matters.
Harakka believes that “thinking on a multinational level” is needed to avoid “harmful regulatory competition” among the bloc’s 27 members and prevent having to individually alter thousands of different laws regulating different kinds of contracts. He compared this approach to the EU’s Markets in Crypto Assets (MiCA) legislation, which will create a uniform standard for each country if it is adopted.
Regulators across the world are struggling with how to classify and regulate decentralized initiatives such as financial applications in which there’s no central lender. Some have argued decentralization is a myth, as in practice there’s always someone in control; in the U.K., the Law Commission of England and Wales has published a consultation on how to deal with issues of structure, governance and taxation.
While some policymakers have argued it may be too early to get set rules for decentralized finance – and largely left the topic out of the EU’s landmark MiCA law – Harakka argues it’s time to start thinking about a philosophical approach to the issue. He noted that it took two decades for the bloc to figure out how to regulate online data flows and regulating smart contracts “could take a while as well.”
The call for EU legislation to recognize DAOs is a significant development in the world of decentralized finance, and it remains to be seen how the EU will respond. If implemented, this move could provide a framework for the growth and development of the decentralized finance industry in the EU, while addressing concerns around governance, responsibility, and compliance.
Source: CoinDesk
