BANK token - Legal Assessment

Dear community,

here is the product of the Legal Guild’s Research on the nature of the BANK token.

https://drive.google.com/file/d/1WomKnCAaQTcNGh-VhPHKe-yUiyzXgSih/view?usp=sharing

Please give a read :nerd_face: and feel free to comment / suggest changes or integrations.

The first paragraphs on the genesis of the token, the distribution and the utilities connected to the token are of particular importance.

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Can you please change the permissions to be viewable?

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Now it should work! Apologies

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I appreciate the outstanding effort that went into this. It would help me a bit if I understood what the goal with this effort is.

For example, is it to help BanklessDAO members learn the risks they may face depending on the jurisdiction in which they reside? The introduction seems to rule that out (“this paper does not aim to provide interested people (community members and prospective community members) definitive answers on the BANK token’s proper legal treatment which, as noted above, may vary by circumstance and jurisdiction.”) Plus, BANK owners generally wouldn’t face any risk just for owning a token.

Is it to chart a course for BanklessDAO going forward based on jurisdictions where existing laws are more crypto friendly? Is it an effort to get a grasp on existing law so that we can propose some transnational set of standards for Bankless and other DAOs that issue tokens? Some or all of these?

Again, it’s clear that some very careful thought and research went into this. Thank you. I was a securities litigator in the USA for many years. To me, it’s always been clear that BANK and most other tokens are securities under existing law. But, I don’t think there’s a snowball’s chance that the existing legal structures can deal with this, so I’m curious if there’s some other goal or aspiration here. Thanks!

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Are documents like this being uploaded to a central location? Is the/are there plans for a Bankless DAO archive?

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Wow, this is really well done. I only had 2 legal classes @ university so sadly I can’t contribute but the info provided here is phenom. Well done and thank you!

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We had different goals.

In some countries, due to lack of knowledge, everything is treated in the same way and considered not lawful. We strongly believe that the launch of BANK was characterized by certain features that do not make BANK necessarily a security. Therefore we felt the need to explain and deliver a legal narrative for the community and external interested people. Things may of course change depending on the direction that the DAO will choose.

The Comparative law approach reflects the decentralized and global nature of the community and may also shed light on some legal approaches which are more straightforward than the US one. Not because they are “crypto-friendly”, but because they show the willingness of understanding the different goals that a token can have. The application of the Howey test is really a rude way of treating the issue, which does not take into consideration the technological advancements and what actually a token allows to do.

The piece will be the basis for the preparation of the white paper in Season 2. It’s basically the ground research.

Finally, the research may influence the choice of the jurisdiction for the DAO. Times are more and more mature for a Bankless DAO legal entity.

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Why are we so worried about it being a security? What are the implications of leaning into a definition of BANK as a security? Could jurisdictions like Wyoming help with this?

Thanks for your careful reading. We are going to accept all your suggestions / corrections

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Wow, I appreciate the amount of effort and dedication put into the creation of this document.

I have not read the full document - just the first few pages - but it looks to be very well thought-out.

In time, I may read the entire document but, in the meantime, it’s good to be able to refer to the conclusion. Possibly not the ‘way things are done’ but I wonder if it might be worth leading off with a summary of facts at the beginning of the document for framing purposes.

Also, a very minor typo, the heading ‘VIII. Australian and New Zealand law’ has ‘Zealand’ spelled wrong.

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Thank you for the suggestions and for the indication of the typo. We will fix it.

I agree with respect to the conclusions. Not being too conclusive has been a common decision of the contributors.

We will prepare a kind of abstract to put at the beginning of the document. Very good idea!

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Why are we worried about BANK being deemed a security? Essentially because under many jurisdictions the issuance of a security is highly regulated and will create barriers for acquisition (e.g., accreditation status will be required for US buyers) and burdens on the DAO (e.g., filing quarterly reports with the SEC). If BANK were deemed a security it would essentially destroy the token in its infancy.

Why does it matter that we have a strong argument against being deemed a security? Because regulations are driven by politicians, and politicians are motivated by power. DAOs generally, and Bankless in particular, are disrupting existing power structures. Therefore, we need our battle armor.

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Incredible work here.

would definitely love to see this passed to the AV guild to make a TLDR video, as well as to the writer’s guild to make a blog article series.

Thank you very much for your comment. Exactly, the assessment is just a way of presenting our own narrative!

Thank you my friend. We are going to prepare a short medium post!

Well put and quite an interesting document.

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I’m going to attempt this:

tl;dr
BANK tokens act as an access pass with different amounts denominating different levels of access to the BanklessDAO community. This was not done with the intent of raising capital nor promising future returns (reasonable expectation of profit). This BanklessDAO community is self-governed and follows a democratic structure.

Therefore BANK itself is not a security nor bond. However, there might be some reporting requirements depending on jurisdiction.

how was this @Eagle ?

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Very good IMO! A very clear understading of the issue at stake …
:nerd_face:

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