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== Legal issues == BOND tokens are a type of security that a DAO issues promising to pay back some investment with a percentage of future profits the DAO earns through work fees. For a DAO to issue BOND tokens, it must comply with local laws for each of its members. Given that members may be pseudonymous and international, a DAO will have difficulty identifying which jurisdictions are relevant to determine which laws must be satisfied regarding disclosures and filings before making a market for BOND tokens. In the United States the regulations are set and policed by the [https://www.sec.gov/ SEC]. In the EU, the relevant governing body is the [https://www.esma.europa.eu/ ESMA]. Securities in Japan are governed by the [[wikipedia:Securities_and_Exchange_Surveillance_Commission|SESC]], in Korea by the [https://www.fsc.go.kr/eng/index FSC], in India by [https://www.sebi.gov.in/ SEBI]. DGF is attempting to create protocols for algorithmically satisfying the requirements of as many regulating bodies as possible. There is a major difficulty in this undertaking, inasmuch as regulating bodies sometimes have contradictory requirements, such as disclosure vs. privacy protection. Decentralized platforms have a fundamentally different governance structure than centralized corporations, and so the same types of disclosures are often nonsensical or impossible, since there are no fixed leaders in a genuine [[DAO#Primary DAO|primary DAO]]. Our argument is that designing transparent mechanisms which quantify the risk more accurately than traditional corporate securities should convince legislatures of many countries that it is possible to create protocols which serve their citizens faithfully, giving them access to these new financial technologies. Currently, however, we cannot recommend issuing BONDs under DGF unless your DAO is entirely composed of members in jurisdictions with clear rules for compliance. As such, the formulas given in this DGF wiki are entirely academic arguments for future BOND token mechanisms.
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