#fund9 ## Please describe your proposed solution. Building solutions on the blockchain come with many legal questions that need to be answered. Legal frameworks around blockchains are constantly being updated with new laws being drafted globally. These developments must be tracked, legal obligations related to LFF must be understood and communicated. There are 13 problem areas that need to be understood.  **1 - Legal status of LFF Action NFTs** At LFF, we are redefining earning relationships with Actions. The basic system is: - Do work. eg. Develop software, plan/hold workshops, design UI/UX, … - Document using photos, videos, docs, etc. - Generate Action NFT, put it up for sale - Others buy to pay you/show support. This is a new method of doing business, of getting paid. Fundamentally, it is no different than creating art, making an NFT, and selling it on an NFT marketplace.  We will be using this method of payment internally at LFF. What that means in legal terms, is the question.  Actions are NFTs, they can serve as a [[13- The Attributes of Action#Notarizing Action|digital notary]]. How can this be utilized? **2 - Legal status of earning through Project Catalyst** There are many earning opportunities in Project Catalyst: proposals, proposal assessments, Challenge Teams, etc. What tax and other obligations earning in this environment is not obvious for all.  **3 - Legal frameworks for Decentralized Organizations** What legal frameworks are available for Decentralized (Autonomous) Organizations? What should be considered? At what point does a DAO/DO need a legal standing? What challenges will new DAOs face if they don’t have legal standing? What legal ramifications exist for organizations like LFF? **4 - Legal framework for tokens and coins** What regulations must LFF and other projects adhere to in regards to their tokens and coins to minimize scrutiny by regulators? Security vs commodity classification and its implications.  **5 - Legal status of smart contracts** Mostly Ethereum blockchain and some other blockchains and platforms enable its users to conclude smart contracts. Legal status of smart contracts, its validity and the way the smart contracts are performed are some of the curial challenges and ambiguities that blockchain community faces everyday.  **6 - Legal status of real world-asset backed tokens and coins** How the economic value of the crypto assets are determined is still a vague problem. Some crypto assets’ values are supposedly determined according to the value of the real world assets. In some cases, the question whether these tokens and coins may be considered as option agreements due to the classical approach of legislation in force arose. **7 - Legal status of the data stored in blockchains** Ever since the European Union adopted the GDPR, inevitably the whole world’s focus has shifted to this very area. Due to the storage of massive amounts of data in blockchain, the question whether these data could be considered as personal data or not arose.  **8 - Crowdfunding through ICO-ITO and Crypto Assets**  Due to its global nature, crypto assets and their initial offerings are inevitably suitable and convenient ways for crowdfunding. In the event that initial offering of these coins or tokens are considered as crowdfunding, the legal regulation that these offerings may be subjected to may dramatically vary.  **9 - Taxation of crypto assets** As the amount of capital that shifts to the crypto assets and relevant platforms, states’ focus inherently shifts towards taxation of these crypto assets. Due to crypto assets’ global and decentralized nature, various serious legal problems may arise such as double taxation, income tax and VAT. In this regard, different states may take on different approaches, that’s why approaches of the leading countries in this area shall be closely examined.  **10 - AML/KYC Regulations** One of the most solid reasons why states tend to look sideways at crypto assets and blockchains is due its mostly unregulated status and its ability to conduct transactions between peers without need of any intermediaries. As the states’ ability to track and control transactions decrease, states tend to take more preventive measures. In this regard, many states and international organizations either adopted some regulations that govern this sector in the context of AML or made crypto asset holders and virtual assets service providers subject to current legislation in this context.  **11 - Legal meaning and status of whitepapers** During the classification of crypto assets, their whitepapers and the statements in these whitepapers are often instructive. Therefore, how the whitepapers are concluded and the possible interpretation of the meanings thereof play a vital role in the classification of these crypto assets.   **12 - Intersection of Intellectual Property and BlockChain** As the application and usage of blockchain technologies and its derivative products, infringement of intellectual property of the relevant persons may become widespread. Even though there is no specific regulation on blockchain in many states, classical legal doctrines and rules still find application in developing technologies. In this regard, intersection of intellectual property and blockchain technologies must be closely examined and members of the blockchain community shall be careful as they continue to prosper.  **13 - Metaverse and Law**  As the technology continues to rapidly develop, even the understanding of what is real and what is virtual becomes vague. It is observed that many people believe that real world legal norms do not apply to Metaverse. On the contrary, legal norms must be strictly taken into account.  **Our Solution** Our team at LFF is a global one but a large part of the team today is from Turkey. We need a solid team of legal consultants from the jurisdiction with expert knowledge on blockchain law to guide us on answering these questions.  We will work with the team at [Tevetoglu Legal](https://www.tevetoglu.av.tr/en) to research and understand these issues. Their work will result in research documents, which we will publish on our knowledge base, The Vault.  We will share the information generated in the Catalyst community through workshops, and spread it further through marketing activities, allowing others to learn. **Who will benefit?** The research we conduct will be determined by the needs of LFF, thus we are the primary beneficiary. Yet these problems affect a larger group than us. Our research will benefit a large category: - LFF, - potential users of Actions,  - earners in Catalyst, - other DAOs/DOs, - and all the relevant actors and members of the blockchain community **Outcomes** The outcome of our work is greater clarity on the legal implications of Actions, earning in Catalyst, DAO legal frameworks and all the aforementioned problems in “The Problem”, for all who are interested. ## Please describe how your proposed solution will address the Challenge that you have submitted it in. **Alignment with the challenge** The challenge aims to solve a fundamental challenge funded proposers face in the ecosystem: establishing legal frameworks for their projects. The solution is to provide funded proposals with solutions to operate legally in their residing country. This proposal aims to do exactly that, providing LFF with consultancy on its legal standing on various issues, benefiting LFF, users of Actions, the Catalyst community, and other decentralized organizations. The proposal will also get a group of lawyers with blockchain expertise into the Catalyst ecosystem.  **Key Metrics** Use Case - How many funded proposals are making use of these new solutions and services - Many funded proposals will be benefiting from our research, LFF will benefit from research and consultation. Impact - How many of these new implementations are mutualistic to funded proposals. - This proposal will benefit many funded proposals. It will answer many common legal questions that are in the minds of many Action users, Catalyst earners, and DAO members. Adaptability - Can these solutions and services be used anywhere in the world - Everyone can use the research from anywhere in the world. The nature of research will be localized to LFF jurisdictions in some cases while ## What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk? ![[Common Risks]] **This Proposal - Tracking Legal Developments** The legal framework for blockchains is rapidly changing. Regulators around the world are working on updating existing frameworks. Tracking these developments is difficult, time consuming work. It requires a professional team of experts. With Tevetoglu Legal, a firm with expertise and a great track record on blockchain law, we mitigate the risks of changing legal frameworks. **This Proposal - Law is Jurisdiction and Context Specific, Needs Expert Consultation** Since legal frameworks become outdated over time based on adaptation of new regulations based on jurisdictions, the research and the outcomes of this proposal will only be educational. There is a risk that this knowledge can be misunderstood by the members of the blockchain community who are not familiar with the legal aspects of the proposed solutions.  That’s why we strongly recommend relevant actors of the blockchain community to still have legal consultancy from experts in the corresponding fields and jurisdictions. That’s why we at LFF mitigate this risk for ourselves by working with Tevetoglu Legal.