Decentralized autonomous organizations (DAOs) pose an “existential threat to the tax base” since they are recognized as partnerships and as such are not liable to company tax, according to Australian Senator Andrew Bragg.

Speaking at the Australia Blockchain Week conference on Monday, Bragg announced a comprehensive piece of crypto legislation called the Digital Services Act (DSA).

In it, the senator highlighted DAOs, among other sectors, adding that they “must be recognized and regulated as a matter of urgency.”


Explaining the reasons behind the proposal, Senator Bragg said that Australia’s “reliance on company tax is unsustainable” given that company tax accounted for 17.1% of total Commonwealth government revenue in 2020-21.

A DAO is essentially an online community that leverages smart contracts to organize some of its governance structure. These organizations often make use of a native cryptocurrency to incentivize their members and govern decision-making by the community.

Bragg establishes ‘minimum’ DAO standards

Senator Bragg also stressed that it is necessary to recognize “the fact that DAOs are self-regulating and transparent, with an in-built system for governance.”

The legal recognition of DAOs also means that there’s a set of “minimum standards” that should be legislated.


These standards, if developed, would provide audit, assurance, and disclosure services from DAOs, giving consumers the ability to distinguish between retail and wholesale organizations.

The Australian senator called for the Treasury to address those issues while also “leaving the field open for DAOs to continue to live up to their name.”

He added that “in ten or twenty years time we may well be talking about the inverse situation: applying the rules for cryptocurrency to traditional finance.”

The proposed DSA legislative package also calls for reforms in such areas as crypto market licensing and custody, while also ensuring that countries like Russia don’t use crypto to skirt financial sanctions.

By the end of 2022, the Australian government is expected to receive a report on digital asset taxation and undertake a token mapping exercise.

The government will also examine the potential of DAOs and how they can be incorporated into existing legal and financial frameworks.

Australia and crypto

Australia made a significant step to adopting a comprehensive regulatory framework for the digital assets space last October.

At that time, the Senate's Select Committee on Australia as a Technology and Financial Centre (ATFC) presented its final report outlining its recommendations for a clear regulatory framework for the country’s crypto sector.


The report included 12 recommendations, including the establishment of legal structures to recognize DAOs.

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