What Is a “Governance Token” in the Context of a DAO and Its Potential Regulatory Status?

"Code is Law" is a philosophical concept in the blockchain space asserting that the smart contract code, which is transparent and self-executing, should be the ultimate and unchangeable source of truth and enforcement for all transactions and agreements. This conflicts with traditional financial regulation because regulators require mechanisms for intervention, remediation, and liability assignment, especially in cases of fraud, market manipulation, or smart contract bugs.

Regulators cannot easily enforce traditional laws against autonomous code, creating a fundamental tension between decentralized design and legal oversight.