NexusNodes Blogs

  Decentralized Autonomous Organizations (DAOs) have gained significant attention in recent years as a way for blockchain-based projects to fundraise and govern themselves. While DAOs offer a number of advantages, they also present unique legal challenges that must be carefully considered in order to ensure compliance with relevant laws and regulations. In this article, we will outline the key stages involved in setting up a legal structure for a DAO, as well as some of the key documents and considerations that may be relevant at each stage. Stages for DAO Legal Structure (i) R&D Company Registration The primary function of this company is to start hiring the team and developing intellectual property. This company is typically set up in the jurisdiction of the core team, and may be structured as a corporation, limited liability company, or other business entity. (ii) Token Issuer Registration This is typically necessary in order to start signing Simple Agreements for Futu...

  In order to assess the jurisdiction of a company in the Web3 ecosystem, we ought to evaluate the company based on its function and the following potential factors while evaluating the jurisdiction for setting up a company. Accordingly, the factors involved would be – (i) the Possibility to accept payments in crypto; (ii) the Possibility to issue tokens; (iii) Special licenses for crypto exchanges / custodial services; (iv) Authorizations in Financial State Authorities; (v) KYC requirements for crypto-related services; (vi) Friendly taxation for virtual assets; and (vii) Affordable price for legal setup. Further, it is imperative to be updated on the financial laws, securities laws, consumer protection laws, and specific legislations for Virtual Asset Service Providers. At an appropriate place in the analysis, we compare the international jurisdictions based on their regulatory foundation for virtual asset services businesses. Basis on the factual background, we will look at c...

  Decentralized Autonomous Organizations (DAOs) are a relatively new concept in the world of blockchain and cryptocurrency. They are essentially self-governing entities that operate on a decentralized network, with no central authority or control. DAOs are designed to be transparent, secure, and autonomous, with decisions made by consensus among members. DAOs are economic projects with both a monetary policy and a fiscal policy. The monetary policy refers to how tokens or other digital assets are created, distributed, and managed within the network. The fiscal policy refers to how funds are allocated within the network for various purposes such as development, marketing, or community initiatives. The legal analysis of a DAO involves breaking down the operation of smart contracts into their constituent parts. Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. These contracts can be used...

Introduction The world of finance is rapidly changing, and digital assets are becoming more prevalent. One of the most exciting developments in this space is the emergence of tokenized bank deposits. These tokens are economically and legally equivalent to traditional off-chain deposits and can benefit from existing deposit insurance schemes. They may even qualify as legal tender in some jurisdictions and function as such in practice. In this article, we will explore the concept of tokenized bank deposits, their benefits, and potential risks. Tokenized Deposits vs. E-Money Tokens: Before we dive into the benefits of tokenized bank deposits, it's important to understand how they differ from e-money tokens. E-money tokens are digital representations of fiat currency that are issued by non-bank entities such as payment processors or e-wallet providers. These tokens are not backed by any physical asset or government guarantee and do not earn interest. On the other hand, tokenize...

  Introduction Blockchain technology has been making waves in various industries, and real estate is no exception. The use of blockchain in real estate can bring about significant benefits such as increased transparency, efficiency, and security. In this article, we will explore the concept of tokenization of real estate projects using blockchain technology and its potential benefits. Blockchain as an Enabling Technology Before we dive into the specifics of tokenization, let's first understand how blockchain technology works. Blockchain is a decentralized digital ledger that records transactions in a secure and transparent manner. Each block in the chain contains a record of multiple transactions that are verified by a network of computers before being added to the chain. The decentralized nature of blockchain makes it difficult for any single entity to manipulate or alter the data stored on it. This makes it an ideal technology for industries that require high levels of se...

  Introduction The rise of digital currencies has led to a growing interest in CBDCs as a means of strengthening monetary sovereignty and improving financial inclusion. The Digital Currency Monetary Authority (DCMA) has proposed a Best-in-Class Design for CBDC that incorporates several key features, including a Trusted Consensus Protocol - Staked Proof of Trust (SPOT) Protocol, a linear scale node degree architecture, and other important concepts. In this paper, we will explore how the Universal Monetary Unit (UMU) can impact the current progress of CBDC around the world. The UMU, symbolized as ANSI Character Ü, is a legally recognized money commodity that can transact in any legal tender settlement currency, functioning as a CBDC to enforce banking regulations and protect the financial integrity of the international banking system. UMU is designed to be a continuous demand monetary system with a guarantor of its redemption value with a high ratio cash reserve for greater than ...

  What are Liquid Staked Tokens? Liquid Staked Tokens (LST) are a new type of digital asset that has emerged in the decentralized finance (DeFi) space. These tokens are created by staking proof-of-stake (PoS) assets, such as Ethereum, and then issuing a token that represents the staked asset i.e., Receipt Token [1] . The token can then be traded on various exchanges, providing liquidity to the underlying asset. Preliminary reading of both Securities and Commodities Act. The Securities Act of 1933 defines a security as “any note, stock, treasury stock, security future, bond, debenture…or investment contract.” The Howey Test [2] is often used to determine whether an investment contract exists. The test has four criterion: (1) an investment of money; (2) in a common enterprise; (3) with an expectation of profits; (4) solely from the efforts of others. Thus, any security meeting all four criterion will indicate the existence of an investment contract. [3] The Commodity Exchang...

  The legal status of cryptocurrency has prompted a heated dispute between the crypto community and those who are ambivalent to the cryptocurrency market. A recent development within the cryptocurrency ecosystem has been the introduction of Liquid Staked Tokens. LST is a category of cryptocurrency that symbolises a user's ownership stake in a blockchain network that uses proof-of-stake (PoS). Users can "stake" their tokens in order to participate in network validation and gain rewards with PoS. Staking, on the other hand, often requires users to lock up their tokens for a period of time, limiting their liquidity and ability to use them for other purposes. LSTs seek to address this issue by enabling users to trade staked tokens on secondary markets while still earning staking benefits. The underlying staked tokens are maintained in a smart contract, and LSTs can be redeemed at any time for the staked tokens. The main cause of legal controversy with respect to LST’s are whe...

  The Proof of Stake (PoS) network involved can have a considerable impact on the agreement between the Storage as a Service (StaaS) provider and network participant. PoS networks are broadly divided into three types: (1) pure or conventional, (2) delegated, and (3) bonded. To validate transactions and get rewards in pure networks, StaaS providers must take control of the participant's assets, thereby compelling the StaaS provider to stake the participant's primary using their own tokens. Participants in delegated or bonded networks, on the other hand, may retain ownership of their assets while delegating validation rights to the StaaS provider, who may stake the participant's primary on their behalf. These variations in network topology can significantly affect the risk assumed by the network member in the transaction, with failure of the StaaS provider to distribute rewards being a common risk across all networks. The contrast between custodial and non-custodial network...

  Introduction The recent meeting of the Group of 7 (G7) committee in Niigata, Japan, focused on central bank digital currencies (CBDCs) and the regulation of cryptocurrency assets. Among the topics discussed was the urgent need to implement the "Travel Rule" for crypto assets, highlighting the G7's commitment to combating illicit activities and ensuring transparency in the crypto space. This article explores the implications of the G7's discussions, specifically addressing how it can impact the global crypto landscape and what lessons India can learn from these developments. Additionally, it delves into the potential effects on Indian crypto holders and traders. G7's Support for CBDCs and Regulatory Frameworks The G7 committee reiterated its support for the development of CBDCs, emphasizing the importance of transparency, cybersecurity, and data protection in their implementation. While recognizing the potential benefits of CBDCs, the committee stressed the need ...

  Introduction The Central Bank of the Argentine Republic (BCRA) has implemented new regulations aimed at mitigating the risks associated with cryptoassets within the national payment system. This decision prohibits payment service providers (PSPCPs) from conducting or facilitating operations involving digital assets, including cryptocurrencies, that are not regulated and authorized by the competent national authority. While this move aims to protect users and the financial system, it has significant implications for various stakeholders in Argentina's crypto ecosystem. At the intersection of technological advancement and financial regulation, the regulation of cryptoassets in Argentina highlights the ongoing tension between harnessing the potential of digital currencies and safeguarding the interests of stakeholders. While proponents argue that cryptocurrencies offer numerous benefits and opportunities for society, regulators have raised concerns about the potential risks and ...

  Introduction The recent court filings by disgruntled creditors against cryptocurrency lending firm BlockFi have shed light on alleged delay tactics employed by the company in its ongoing bankruptcy proceedings. These tactics have raised concerns regarding the ethical conduct of BlockFi and its potential liability for impeding the trial process. This article delves into the reasons why BlockFi may be held liable for delaying the trial and explores the ethical implications of these alleged practices. The Deliberate Sale of Cryptocurrency at the Nadir: One of the key accusations levied against BlockFi is its decision to sell approximately $240 million worth of cryptocurrency just before filing for bankruptcy. Creditors argue that this decision, made at a time when the market was experiencing a significant slump following the collapse of FTX, was highly questionable. By selling assets at the nadir, BlockFi seemingly reduced its potential value...

  Introduction The rapid growth of digital assets, including cryptocurrencies and blockchain technology, has posed regulatory challenges for governments worldwide. The United States, in particular, has been grappling with how to effectively regulate this emerging sector. The behavior of the Securities and Exchange Commission (SEC) in its approach to regulating digital assets highlights the complexities and potential pitfalls of applying existing laws to new technologies. As India observes this discourse, it can learn valuable lessons and proactively establish committees to formulate a comprehensive regulatory framework tailored to the unique characteristics of digital assets. The SEC's Approach and the Limitations of Existing Laws The SEC, as the primary regulatory body overseeing securities in the United States, has faced the daunting task of determining the regulatory status of various digital assets. Chair Gary Gensler's approach, treating all digital assets as potentia...