How Do Decentralized Autonomous Organizations (DAOs) Complicate Traditional Financial Derivatives Regulation?

DAOs complicate regulation because they lack a central legal entity, clear jurisdiction, and traditional management structure, which are typical targets for regulatory enforcement. Derivatives regulation typically relies on centralized intermediaries for enforcing rules like KYC/AML, margin requirements, and trade reporting.

The decentralized, borderless nature of DAOs, often governed by code, makes enforcing these obligations and establishing liability extremely difficult for national regulators.