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Israeli Government Launches Public Consultation on DAOs



Israel’s Ministry of Finance, in collaboration with the Ministry of Justice, has initiated a public consultation to examine the corporate status, regulatory framework, and taxation aspects of Decentralized Autonomous Organizations (DAOs). 

DAOs, operating on blockchain technology, are characterized by decentralized decision-making and contract execution. 

The growing use of DAOs worldwide has led to the need for comprehensive and clear regulations to reduce risk factors and harness the potential of this innovative concept for the Israeli economy.

The initiative follows a report by the country’s Chief Economist on digital assets and government decision number 204 of February 24, 2023, which emphasized the importance of advancing the regulation of activity in digital assets. 

To address this critical issue, a team of experts has been assembled, comprising representatives from the Ministry of Finance, the Ministry of Justice, the State Revenue Administration, the Securities Authority, the Tax Authority, the Bank of Israel, and the National Economic Council.

The team invites input from the public, including scholars, industry experts, and civil society organizations, to provide valuable insights on various aspects of DAOs. 

Some key areas of interest include the types and scope of activities carried out within DAOs, the decision-making processes, benefits, risks, and the potential macroeconomic effects of operating within a DAO structure.

Additionally, the team seeks input on the desired corporate regulation, including issues related to liability, registration, corporate governance, and minority shareholder protections. 

Participants are encouraged to offer perspectives on tax implications, the challenges of applying existing financial regulations to DAO activities, and the risks of money laundering in DAO operations.

The public is encouraged to express their willingness to appear before the team to present their submissions. The team may summon relevant participants for further discussions as necessary to gather comprehensive information. 

All submissions may be used by the team in formulating recommendations and may be published on the Ministry of Finance and the Ministry of Justice websites unless explicitly requested otherwise by the submitter.

The call for comments and public positions represents a significant step towards providing legal clarity and fostering the growth of DAOs in Israel’s economy.

Stakeholders are encouraged to participate actively and contribute to shaping the regulatory landscape for this emerging technology.

Members of the public can send their comments here.

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