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Workshop on Implementing Decentralised Autonomous Organisations (DAO)
Workshop on Implementing Decentralised Autonomous Organisations (DAO)

May 30, 2023

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On May 15, 2023, Nasscom in collaboration with S&P Global, conducted a workshop with the industry to discuss the implementation of DAOs in India. 

DAOs are a new kind of organisational structure, that have no central governing body and whose members form a group to pursue a common purpose. These decentralised structures often use crypto tokens to manage a common treasury or vote on certain decisions etc. In this workshop, we explored the use of DAOs as a governing framework to implement projects in the non-profit organisations sector.

From a technology perspective, we discussed that there are many platofrms available to set-up decentralised projects. We saw a demo of how to create a proposal, designate members rights, set governance rules and vote on it, using the 'Snapshot' platform. 

From a legal perspective, currenlty India does not recognise DAOs as a separate legal concept, unlike a complany or a limited liability partnership. Therefore, the implementation of purely decentralised structures in India may not be possible. However, there might be some potential to implement decentralised governance structures for specific projects wihtin legally recognised structures in India. For example, a non-profit entity registered as a 'society' under the Societies Registration Act, 1980, could issue utility tokens to decision makers for the implementation of a particular project. Here, while the governanance of the entire organisation will be as per its legal recognition in India, particular projects could be implemented in potentially decentralised mechanisms through the use of tokens.

From a tax perspective, it needs to be assessed where direct and indirect tax regulations will kick-in when implementing decentralised governance structures in India. While there is a 30% income tax on income arising from transfer of virtual digital assets, tax regulations in India are not nuanced to deal with more complex transactions related to issuance of tokens (which may be treated as securities) etc.

Overall, the workshop concluded that setting up decentralised governance structures could be explored as a use-case in India, however, using DAOs as an entity to received cross-border payment sin cryptocurrencies would be a much more complex matter with respect to legal and tax compliance.

We plan to publish a post-event note highlighting the takeaways from the discussion. For more information, kindly write to Garima Prakash at garima@nasscom.in and Ashish Aggarwal at asaggarwal@nasscom.in with a copy to policy@nasscom.in.


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Garima Prakash
Manager, Public Policy and Government Affairs

Reach out to me for all things policy about e-commerce, international trade, export controls, start-ups and fintech

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