A pilot project aimed at establishing a distributed autonomous organisation (DAO) – an emerging type of organisational structure reliant on blockchain technology – for use by the public sector globally has been announced.
The United Nations Internet Governance Forum (IGF) Dynamic Coalition on Blockchain Assurance and Standardisation describes the initiative as a ‘collaborative effort showcasing how public sector organisations can leverage blockchain technology and DAO principles to foster transparent, rules-based and high-integrity governance structures’.
In a DAO (often also referred to as ‘decentralised autonomous organisations’), decision-making and governance processes are encoded into smart contracts on a blockchain, enabling members to participate in activities without the need for traditional hierarchical structures, the announcement explains. DAOs typically use digital tokens for voting and decision-making, with their rules immutably recorded on the blockchain. ‘This decentralised approach aims to create trust, transparency and efficiency, allowing members to collectively manage resources, make decisions and execute actions based on predefined rules without the need for centralised control,’ the announcement adds.
“This initiative signifies a pivotal step toward establishing innovative and secure governance models, ensuring that blockchain technology can be harnessed for the benefit of public sector organisations,” said New York City-based Dino Cataldo Dell’Accio, chief information officer at the United Nations Joint Staff Pension Fund, who is one of two co-leaders of the initiative.
The IGF, which has recently entered its 19th year, exists to facilitate year-round global dialogue on digital public policy to ‘inform and inspire those with policy-making power in the public and private sectors’. Institutionally, it is supported by a secretariat administered by the UN Department of Economic and Social Affairs (DESA). Its ‘dynamic coalitions’ are independent entities that exist to ‘bring together diverse stakeholders to collaborate on focused topics, foster dialogue and produce outputs such as reports and guidelines.’
BLOCKCHAIN: EXPLAINED Blockchain is a type of shared database that stores data in blocks linked together via cryptography. Important facets of the technology include immutability (that once data enters the blockchain, no-one can change it); the elimination of a single point of failure; and enabling trust among people or organisations who do not know each other to directly conduct transactions.
The ‘Dynamic Coalition on Blockchain Assurance and Standardisation’ is being hosted by the US-headquartered Government Blockchain Association (GBA), whose executive director Gerard Dache is co-leading the initiative alongside Dell’Accio.
At time of writing (16 January) the coalition has 27 members, with most working in the public sector and a relatively high US-based presence. Those involved also include people working for UK government departments, as well as central banks in Brazil and Nigeria. Global Government Fintech lists all those involved at the end of this article. They are meeting monthly.
The technology being used for the pilot has been ‘donated’ by a GBA member, Gosh. It is described as an ‘Ethereum Layer 2 solution that allows developers to run smart contracts on-chain for free’. Ethereum is a blockchain-based network that follows a set of rules called the Ethereum protocol. A ‘Layer 2 solution’ is an extension built on top of the main Ethereum blockchain (Layer 1). ‘On-chain’ is a reference to ‘on-blockchain’.
Pre-existing DAOs include Dash, which is also a crypto-currency, and Uniswap, an ethereum-based crypto-currency exchange. Many DAOs are involved in software engineering — developing, modifying and maintaining open-source software infrastructure.
But uncertainty exists in many jurisdictions about DAOs’ legal status. In the UK, for example, the Law Commission of England and Wales has run a call for evidence examining how DAOs can be characterised and how the law might accommodate them ‘now and in the future’. A follow-up scoping paper is expected in the first half of this year.
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The UN IGF pilot is proceeding in liaison with other GBA working groups, including those focused on ‘Application Architecture’, ‘Digital Asset Management’, ‘DAO Governance’ and ‘Legal & Legislative’.
As well as its ongoing dialogues, an annual IGF meeting – convened by the UN secretary-general – takes place in a different host country each year. The 2024 edition will be held Riyadh, Saudi Arabia, following the 2023 IGF in Kyoto, Japan, last October. The meeting’s programme is developed by a ‘multi-stakeholder advisory group’.
In the financial arena, the International Organisation of Securities Commissions (IOSCO), the Spain-headquartered global standard setter for securities market regulators, last month published a ‘Final Report with Policy Recommendations for Decentralised Finance (DeFi)’ – a 66-page report including 22 mentions of DAOs.
Its nine policy recommendations aim to address market integrity and investor protection concerns arising from DeFi by supporting greater consistency of regulatory frameworks and oversight in member jurisdictions.
Its recommendations cover six main areas: understanding DeFi arrangements and structures; achieving common standards of regulatory outcomes; identification and management of key risks; ‘clear, accurate and comprehensive’ disclosures; enforcement of applicable laws; and cross-border co-operation.
UN IFG ‘Dynamic Coalition on Blockchain Assurance & Standardisation’ members
Government (public sector)
Non-governmental organisations (NGOs)
Professional associations
Academia
Private sector
Source: https://intgovforum.org/en/content/dynamic-coalition-on-blockchain-assurance-and-standardization-dc-bas (16 January 2024)
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