X20 DAO, the First Decentralized Autonomous Organization Under Italian Law, Was Created

A DAO (Decentralized Autonomous Organizations) is a Decentralized Organization managed by an Autonomous Agent, i.e., software that deals with it “autonomously” from its participants, and is increasingly employed to carry out business activities.

The use of DAOs poses risks that alarm potential investors and participants: from cybersecurity to the ability to perform legally valid acts via confidentiality protection.

In Italy, the first recognized Autonomous Decentralized Corporate Organization was born precisely with the aim of protecting the operations of its members and delivering them legal status. It is X20 DAO, a prototype of a decentralized company, basically, a community gathered on blockchain technology – non-hierarchical and organized according to a horizontal structure – whose members, as well as partners, act in the name of a common goal.

Lawyer Alessandro Negri della Torre, creator of X20 DAO and Founder of LX20 Law Firm, a law firm based in Milan and New York specializing in finance, technology, digital and crypto assets and corporate law, among other things, explains, “The birth of X20 DAO, the first corporate DAO in Italy, represents the first step toward the regulation of decentralized companies: its creation aims to demonstrate that it is possible to create a point of contact between the virtual and the real by assigning a legal framework to DAOs, autonomous organizations based on a horizontal structure whose innovative statute meets the emerging needs of companies that want to operate in the field of Web3, metaverse, cryptocurrencies, NFTs and more.”

According to Negri della Torre, many jurisdictions have addressed the issue by amending, in some cases, industry regulations. While X20 DAO uses the institutions of Italian corporate law to create a company that operates solely through a digital interface for internal consensus formation among shareholders through a token representing the corporate shareholding.

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How X20 DAO works

Strongly linked to the crypto world, the logic of Web3, and metaverses, X20 DAO aims to be a legal bridge between virtual and real, the seed from which the companies of the future could be born.

Unlike other Decentralized Autonomous Organizations, X20 DAO can enter into contracts, take equity stakes, acquire NFTs or other assets, and perform acts that are legally binding and recognized by the system to which it belongs.

Specifically, the organization operates under rules established by all its members and set forth in its bylaws and in “smart contracts,” namely the unmodifiable computer protocols that enable the application of financial transactions through “governance tokens.” These are certifications of ownership of digital rights that assign decision-making power to those who own them. All members of the organization, who communicate with each other through a platform, must have a “governance token,” for which reason all members are members and equity holders.

Every decision is made upon consultation of all X20 DAO members through a vote. There is no top management, and no hierarchy. In fact, the governance token is the tool that allows members to be members of society. Member interaction with the DAO is done through an application specially designed and developed by X20 Tech, the technical development company that is part of the X20 Network.

The purchase can be made in cash or cryptocurrency according to the rules set in the X20 DAO bylaws. The value is established conventionally among the members as it normally is when shares are sold or new members enter by increasing the company’s assets.

Why a “legal” DAO is needed

DAOs are created to enable larger or smaller communities to collaborate in a democratic manner in the implementation or management of projects. The problem with these organizations is that, in the vast majority of cases, they are informal forms of collaboration, lacking, that is, a clear legal status.

In many cases, practical problems arise such as, for example, the possibility of DAOs acquiring holdings or entering into contracts. Without a legal container, these are problematic operations that limit the effectiveness of DAOs in managing projects that straddle the line between decentralization and centralization.

About X20 DAO

X20 DAO was born in 2022 from an idea of Attorney Alessandro Negri, founder of LX20 Law Firm specializing in fintech, insurtech and regtech. LX20 Law Firm has a presence in Milan and New York City. The LX20 Law Firm – in which Andrea De Lodovici and Thomas Iacchetti participate as partners of X20 DAO – has supervised, also in the field of distributed ledger technologies, the first issuance of participatory financial instruments using Hyperledger, the creation of shares natively based on DLT and a shareholder register of an SRL also based on DLT.

X20 DAO carries out consulting activities in the field of distributed ledger technologies and decentralized finance, and enriches a multidisciplinary network already composed of LX20 Law Firm, X20 Digital Trust Services, and XLean.

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(Featured image by GuerrillaBuzz Crypto PR via Unsplash)

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