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There have been big leaps in blockchain governance: we’ve got decentralized organizations, smart contract voting, and even a decentralized state. Now, one cryptocurrency is trying to expand governance options by launching a decentralized venture capital fund. If successful, Dash Ventures will be the first investment fund virtually owned and operated by a DAO.

The project was described by Dash Core CEO Ryan Taylor this year, but the story was buried in the avalanche of bad market news. In his Q1 Earnings Call, Mr. Taylor announced “a wholly separate entity through which the network can make investments in equity, assets, debt or other investment vehicles with the capability to distribute gains back to the Masternodes and strengthen our network.”

Dash Core Group, the legal face of the cryptocurrency’s development team, claims to be the first entity that is legally owned by a DAO.

Masternodes jointly control a treasury funded by 10% of the network’s mining rewards. Until now, most of the treasury disbursements have consisted of one-time grants and donations to companies that promise to improve distribution or promotion. A venture fund offers the possibility of collecting dividends.

The idea was revisited in an AMA last week. “Right now the Dash protocol only allows for gifts,” Mr. Taylor explained on an episode of the Three Amigas podcast. “What it doesn’t work so well for is very high risk ventures…In the real world, people take something in return.” For the first time, he said, a new legal entity would make it possible for the DAO to make loans or own equity in the projects it funds.

It would also have the additional benefit of giving crypto an answer to the Rat Poison and Baby Brains crowd: “It does away with the argument that it’s not backed by anything.”

Legal Storms Ahead?

But raising a few million dollars for a virtual investment fund is probably the easy part. If you thought Ripple was getting a hard time from the SEC, imagine the legal hurdles in setting up a company whose owners are international—and anonymous.

“We put a lot of constraints on the lawyers but we wanted to make sure that we adhere to the values that makes the Dash community strong,” Taylor said in the earnings call. Among those constraints was flexibility, the ability of the Masternodes to own the new fund, and that they “should not be required to volunteer their identity.” The last requirement might make taking profits a question of Olympic-level legal acrobatics.

Since then, the Core team appears to have identified the Cayman Islands as the friendliest jurisdiction, but there are still plenty of legal hoops. “The original estimate for Dash ventures was sometime in Q3,” Taylor told the Amigas. “As we’ve engaged with local counsel in Cayman, there has been some feedback that the structure that we thought would work had a few downsides… But the good news is that they said that there were some structures, it just required a bit of tweaking.”

Asked for a timeline, Mr. Taylor said, “I wouldn’t anticipate years. This is one or two quarters away, at most. I would be surprised if this pushed it beyond Q4.”

If successful, the new legal structure could be a model for further DAO-owned, for-profit companies.

That may sound too good to be true, and it wouldn’t be the first time that Dash’s roadmap turned out to be a bit optimistic.

The author has investments in Dash.