What Is the Regulatory Hurdle for a DAO Issuing a ‘Security’ Token?

The primary hurdle is the requirement to register the token offering with regulatory bodies (like the SEC in the US) or qualify for an exemption. If the DAO's token is deemed a 'security' under the Howey Test, failure to register can lead to significant fines, legal action, and the requirement to rescind the sales.

This is a costly and complex process for a decentralized entity.