At a recent American Bar Association (ABA) Tax Section meeting, members discussed obstacles preventing blockchain-based financial entities from gaining tax-exempt status. According to one member, decentralized autonomous organizations (DAOs) that execute blockchain transactions aren’t accountable or predictable. Applicants for tax-exempt status usually must explain how they conduct not-for-profit activities, which DAOs can’t do. In addition, there’s the uncertainty about how existing tax laws and accounting rules apply to DAOs. One ABA member argued that reining in DAOs comes down to a “give and take” between technology and regulatory structure.
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