Regulation will evolve. BVI may be the best fit right now but what about in 5 or 10 years? If a different jurisdiction becomes more attractive, how difficult and expensive would it be to transition?
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This is a very reasonable concern. Certainly weāre seeing a lot of projects right now stuck because they set up an entity in a particular jurisdiction, one or both turned out to be unsuitable, and now itās very hard or impossible to unpick. Aragon is a good example here.
What I would say here is:
First, we shouldnāt make the perfect the enemy of the good. I donāt think weāre going to hit on the optimal solution here. There may not even be one.
That said, I think several features of this proposal and general approach make good sense in this regard, even if it does turn out to be very suboptimal:
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By splitting up the governance into difference focused units, thereās less risk of jamming up the whole project. Many of the the projects I alluded to above are particularly stuck because they aimed for a monolithic governance structure able to deal with the entire project. We think thatās impossible to achieve and the consequences are far worse when you get it wrong.
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Practically speaking, the BVI setup can be both evolved and dissolved. I canāt speak to expenses in detail right now. The HOPR Association has paid quite a lot for this process (low tens of thousands) but a lot of that has gone into seeking legal opinion about a relatively untested approach in an uncertain situation. In any future jurisdictional change, those costs would be borne by the community, but those costs wouldnāt necessarily repeat in future.
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In the most extreme scenario, unpicking this setup would be as āsimpleā as making a governance proposal to move the assets to a new multisig, and starting governance again from that new setup.
This actually brings up another point: once this is live, the security around what I call meta proposals (proposals to evolve the governance itself) will need to be very robust to prevent this kind of thing from happening as an attack.
Thatās a separate issue though: from a technical and legal perspective thereās nothing to stop this from happening and the real-world costs would be low.
Thanks for the robust response. I agree with you completely. I was just reading your statements about a multi-jurisdictional approach being a possibility in the future which seems interesting as well. At least in the U.S., it appears the regulators want things to be muddy and unclear as it gives them an advantage.(for now) Being proactive and agile to changing regulations will pay off in the long run. Clearly, you and the rest of the HOPR team have put alot of effort into this and I thank you for that.
Proposal definitely seems fishy as mentioned in the twitter space. But for as long as Iāve been around the team has not given any reason to even suggest they would rug pull or do anything even close to it. Its actually pretty creative. I support this project and will continue to support to move forward.
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Thanks for the Twitter Spaces , I will vote yes to this proposal
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Thanks for your honesty and support. Iām super sympathetic to being suspicious when the legal sphere intrudes into the crypto one. They arenāt comfortable bedfellows.
Obviously people need to make up their own minds, and I donāt want to be dismissive of concerns, but if someone is worried about rug pulling in general, I would invite them to consider that there are far easier ways to rug pull than starting a long conversation about law and inviting a whole bunch of community input!
If people have specific concerns, then do please share them and Iāll do my best to allay them.
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Sorry, I should have clarified earlier. BVI stands for British Virgin Islands. Itās a British Overseas Territory but a separate legal jurisdiction from the UK (although it has its basis in English Common Law)
I support the proposal as in the previous discussion
fully support
What is the proposed timeline for establishing the trust? is this still for 2023?
It is difficult to argue without a legal education and it is difficult to find an ideal solution here, but I consider this proposal a good one. I trust the team, because it is clear that they had a lot of consultations with lawyers, they also studied the experience of other projects and took into account their mistakes.
I hope HOPR can actually create a working scheme for how to legally link a crypto DAO with the current laws of the real world.
The issue of transparency is not entirely clear, whether directors will be able to make decisions secretly, without the knowledge of the community.
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Anything that improves the legal security of HOPR assets is certainly useful for the community, could contribute to the long-term sustainability of the project. However, this can lead to excessive centralization, whereas decentralization is one of the main paradigms of blockchain projects.
What is the attitude towards the blockchain industry in the jurisdiction of the British Virgin Islands? What might be the possible costs for members of the HOPR community?
Hi - we made significant progress on structuring the whole setup. The discussion of the legal entities involved, the respective roles etc is something that we have worked out in the past months with fantastic legal support both in Switzerland and a BVI-specific law firm. So yes, it will definitely happen in 2023. In fact, we now need to finalize the details that are to be voted upon within this governance discussion here to finalize everything. It might seem like āoh but it doesnāt look like much has been done yetā - but in fact we had TONS of discussions to even get here. While we work with really supportive and experienced lawyers, this is still a new setup and not a blueprint that gets replicated. Iām positive that we can get it easily before end of the year though.
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whether directors will be able to make decisions secretly, without the knowledge of the community.
We will have legal documents (I think itās the deed but not sure as I havenāt been personally as deeply involved in this project) to prevent directors rugging the Trust. In fact, one must-have criterion was to find a legal entity that is required to follow the vote of the community - if the directors like it or not.
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What is the attitude towards the blockchain industry in the jurisdiction of the British Virgin Islands?
BVI recently enacted itās VASP act - please find here the assessment of the Harneys, the law firm that we are working with. It is a sensible framework that brings certainty to crypto projects like us to the BVI which is a great signal and shows how they are quite active in the field.
What might be the possible costs for members of the HOPR community?
None of what gets set up here should lead to costs for anyone. In fact, this structure is designed to reduce liability and regulatory risk for participants (e.g. we want to clarify that governance is not a common enterprise and none of your dealings with HOPR are securities matters). At HOPR we generally try to do what we can to limit technical and legal risks for community members but we cannot give you actual advice on how to handle your own legal setting & funds. What some people suggest if you want to be extra careful, is to set up your own limited liability entity to protect yourself with another ālegal shieldā.
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To be honest, Iām not really sure about the outcome of this proposal, But I have full trust on the team therefore Iāll vote yes on principal this time :)
Iāve read the the assessment of the Harneys about VASP act , thanks. From what has been written, it follows that this is quite a competent, balanced document that promotes civilized relations in the field of crypto assets.
But I didnāt like the following context: āInteractions with potentially āprohibitedā customers, such as persons on assets freeze lists under sanctions regimes,
or those based in countries, such as Russia, whether significant limits have been placed on the provision of digital
asset services by the UK family of jurisdictions, including the BVI.ā
I want to note that the citizens of the Russian Federation make up quite a large part of the community, and I donāt think they will like it. Of course, I understand the desire of the HOPRA community to be completely white and transparent, but wonāt the participation of various companies and an increase in administrative resources provoke problems for a certain part of the community.
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I agree with the proposal. The current global trend is to eliminate anything that does not affirm the so-called framework to existing finance. Taking a fundamentalist position, which is the root of DAO and WEB3, is not in the long term interest of the community members.
Thanks for your support. You concern about sanctioned jurisdictions as they apply to regular users is noted and shared. Iām already in the process of clarifying with our lawyers what that vague term āinteractions withā means. We hope to have an answer this week.
The hope, which hasnāt yet been contradicted by our legal advisors, is that governance participants from Russia and similar jurisdictions will still be able to conduct standard governance activities (discuss, sign, vote, etc.) because they will do so via the proposed governance platform, which is a distinct entity.
Those participants interact with the governance platform, and the trust interacts with the governance platform, but the participants and the trust donāt directly interact.
There would likely be a restriction on what proposals could be made (e.g., it would probably be impossible to send funds to registered Russian entities), but normal participation should be unrestricted.
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great discussion overall