In an effort to avoid future legal concerns, SushiSwap will establish actual organizations in Panama. But is it worth it?
With regulators showing more interest in cryptocurrencies, SushiSwap and other DAOs are trying to improve their regulatory structures to avoid unnecessary penalties or lawsuits.
On October 26, Sushiswap, a decentralized exchange (DEX) with yield farming capabilities, decided to adopt a regulatory structure through three entities based in the Cayman Islands and Panama.
According to a statement by Sushiswap, they have hired legal counsel to advise on the planning and implementation of the legal structure of SushiDAO and the organization of the legal framework for the legal entity and its products.
How will each organization operate?
The Cayman Islands Organization (DAO Foundation) will administer the SushiDAO IRL through a board that has “the flexibility to manage the governance process on the Sushi blockchain” to facilitate off-chain operations.
In addition, the new Fund will take care of other essential tasks such as treasury management, endowments, on-chain governance, facilitating proposals and voting.
The “Panama Foundation” manages the existing protocol, including AMM/order book, Kashi and staking-related contracts, as well as providing support to service providers.
Finally, a new company called “Panama Corporation” will be in charge of protocol operations related to the GUI layer (Front-end).
This consortium will act as a wholly owned subsidiary of the Panamanian Foundation, helping service providers develop and maintain the GUI layer of the protocol.”
SushiSwap community reacts
While the proposal has been approved and the team behind SushiSwap is working to implement it, the magnitude of the changes has caused controversy among Sushiswap enthusiasts, with some users questioning it. whether the protocol makes the right decision in establishing its position between the Cayman Islands and Panama, when legal issues arise they must be prepared to comply with its regulatory framework . For example, Hamletmachine says:
“IMO any Head Chef must embody this core ethos and let that guide any legal discussion/outcomes. We cannot afford to restrict these open source tools to anyone who wants to use them, from time to time. Otherwise, just build on Amazon AWS, apply for a money transfer license and call it a day. “
Nickjrishwain, for his part, points out that by its very nature, the proposal. However, while the legal structure seems like a solid recommendation, it could affect the operation of the protocol in the long run.
Another user nicknamed Neiltbe, who was apparently part of the team that created the proposal, responded to the community’s concerns by saying that they suggested using an organization and company in Panama because the following reasons:
“(1) The nature of the protocol/GUI layer, (2) The Panama platform is non-commercial in nature and has no beneficial owner and is therefore well suited for protocol implementation, (3 ) Sushi is participating in the FATF VASP instruction account and the structure has been designed to avoid engaging in VASP activity if any, (4) the company formation process resulted in two entities that may contain separate transaction classes protocol and GUI, which reduces the need to form additional entities and (5) no corporate tax on these entities. “
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