SushiSwap Restructures DAO To Avoid Legal Troubles

The restructuring of the SushiSwap protocol has created three separate DAOs that will be based in Panama and the Cayman Islands. 

SushiDAO Votes 100% For Restructuring

The legal structuring proposed the creation of the DAO Foundation, Panamanian Foundation, and Panamanian Corporation to bring more flexibility to the operations. Each of these DAOs will serve a different purpose. The Sushi DAO, the decentralized autonomous organization behind the SushiSwap crypto exchange, has voted entirely in favor of the proposal. The Sushi team has spoken out about the intention behind the move, saying, 

“[The] purpose of the entity structure & framework is to provide maximum flexibility for Sushi to proceed in whichever direction the DAO or governance takes it, while also mitigating risk.

The decision to restructure the organization comes close on the back of the latest Head Chef drama at SushiSwap. 

Different Responsibilities

Of the new structures, the DAO Foundation will be administering treasury, grants, and on-chain governance processes and facilitating proposals and voting. The Panamanian Foundation will handle the existing Sushi protocol, including the smart contracts related to the automated market maker/orderbook, Kashi, and staking. Finally, the front-end management of the protocol, or the graphical user interface layer, will be under the management of the Panamanian Corporation. The entire setup process for the restructuring is expected to take four weeks. 

Regulation Demands More Compliance

Governments in the United States and the European Union are devising their own crypto regulatory frameworks. In fact, there has been an increasing interest in the crypto space from financial regulatory watchdogs like the SEC and the CFTC. The increasing oversight of cryptocurrencies and blockchain technology has led to many upheavals in the industry, which has had an overall rough year in 2022. In an example of regulators closing in on DAOs, the CFTC had filed a lawsuit against OokiDAO for running an unregistered derivatives exchange. This is the first time the regulatory body has moved legally against a DAO, indicating the changing compliance environment in the crypto space. 

DAOs Moving Towards Restructuring

Discussions in the Sushi DAO forum all agree on the consensus that a legal structure is necessary. However, there have been doubts about the countries selected. Some users have questioned the selection of countries at the brink of political or financial collapse or prone to bail-outs from North America. 

With regulators showing deeper interest in their operations, many other DAOs have been going the route of restructuring to retain some legal flexibility. Recently, Gnosis’s SafeDAO approved a proposal limiting the liability of SafeDAO participants in the case of any legal trouble. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.