Pressure test 1 · regulatory
A regulator characterizes DAO benefit units as securities
SEC, CFTC, or foreign equivalent argues that DAO benefit units are investment contracts under Howey, securities under Reves, or pooled investment vehicles. Action: cease-and-desist; investor letters to beneficiaries; market reputational damage.
Scenario
SEC, CFTC, or foreign equivalent argues that DAO benefit units are investment contracts under Howey, securities under Reves, or pooled investment vehicles. Action: cease-and-desist; investor letters to beneficiaries; market reputational damage.
Cost / impact
Reg D 506(b) registration burden if pivot is forced; potentially fatal to Tier 2 deployments if regulator wins; templates re-engineered.
Prevention
Eight bright lines + per-property isolation + permissioned membership. Howey/Reves/partnership analysis in `04-perimeter/`. Annual outside securities counsel review.
Mitigation
Architecture is designed not to need to register. Fallback: Reg D 506(b) per-deployment exemption (NOT 506(c) — accredited-investor requirement excludes most landowners).
Residual risk
Real but bounded. Architecture is designed to defeat horizontal common enterprise (per-property isolation) and public offering (permissioned membership). Vertical commonality fact-dependent.