Articles
By Uri Volovelsky & Sivan Shlomo Agon
Decentralized Autonomous Organizations (DAOs) are blockchain-based entities that operate without centralized management or shareholders, enabling worldwide token holders the option of participating in their governance through self-executing smart contracts. With approximately fifty thousand DAOs controlling over $30 billion in assets, these organizations offer unprecedented efficiency and global collaboration, enabling stakeholders to participate and contribute to the operation of DAOs regardless of their jurisdiction or physical presence. DAOs, however, also present significant legal and regulatory challenges, particularly concerning liability, contractual enforcement, tax obligations, and oversight. Their decentralized and fluid structure makes it substantively difficult for any single country—including powerful actors such as the United States and the European Union—to assert jurisdiction or exercise regulatory authority over such organizations. In addition to governance considerations, the decentralized, pseudonymous, and borderless structure of DAOs may be exploited for unlawful purposes, most notably money laundering.
This Article examines how DAOs, particularly within the decentralized finance sector, facilitate anonymous cross-border transactions that pose novel and significant money laundering risks. By analyzing existing regulatory responses in major jurisdictions including the United States and the European Union, as well as efforts by key international organizations such as the Financial Action Task Force, the International Monetary Fund, and the United Nations, the Article demonstrates that prevailing regulatory frameworks and enforcement models cannot adequately respond to the distinct challenges presented by DAOs. This regulatory vacuum poses significant risks to global financial stability, the integrity of the financial systems, and core national-security interests, including the prevention of sanctions evasion, counterterrorism and proliferation financing, and the deduction and disruption of state-sponsored, cyber-enabled illicit finance. Accordingly, the Article proposes a novel, modular, risk-based, global anti-money laundering framework tailored to DAOs’ unique operational realities. The proposed framework aligns with principles of functional equivalence, technological neutrality, and transnational cooperation, offering a more effective means of addressing DAO-related, anti-money laundering risks while preserving space for innovation.
Untwisting the Security of Undersea Internet Cables
By David W. Opderbeck
The seafloor and its communications infrastructure is a key warfare domain. The global Internet depends on networks of undersea transcontinental cables that are remarkably vulnerable to physical attacks by conventional forces and shadow fleets. Nearly all this infrastructure is privately owned by a small number of providers, including increasingly massive hyperscalers such as Google, Microsoft, and Meta. Responses to incidents that could either be attacks or unfortunate accidents are complicated by questions of intent and attribution as well as by applicable legal frameworks. The law of the sea embedded in the United Nations Convention on the Law of the Sea (UNCLOS) provides some legal touchpoints but these traditional regimes were not designed for the global Internet age. The law of armed conflict (LOAC) applicable to cyberspace as reflected in the Tallinn Manual in key respects is ambiguous concerning cables lying in international waters. This Article examines existing legal frameworks and suggests a multilayered approach that draws on Internet governance bodies, national licensing regimes, open-source monitoring, financial carrots and antitrust sticks, and modifications to UNCLOS, while also warning against some recent policy moves in the United States that would lead to greater fragmentation and less security. Ultimately there is no easy solution to this looming problem. It requires nuanced Internet governance and policy responses and international cooperation.