Neil Bhasin about SushiSwap’s plan to implement legal structure

Regulation has become such a big deal in the crypto space. For instance, the United States Securities and Exchange Commission (SEC) has been locked in a legal battle with Ripple Labs since 2020. All over the world, regulators are increasingly targeting crypto firms for noncompliance. With this in mind, many players in the crypto industry are beginning to take steps to stay on the right side of the law.

SushiSwap has been mulling over the idea of creating a legal structure since April. In September, Neil revived the idea, submitting a proposal to implement the legal structure. The motion was passed on October 26, with 100% of the votes in its favor. Moving forward, SushiSwap will create three entities – a DAO Foundation based in the Cayman Islands and a Panamanian Foundation and Panamanian Corporation, both based in Panama.

The DAO Times team was able to get Neil to grant us an exclusive interview. In the interview, he takes us through the motive for the idea, why Panama and the Cayman Islands were chosen for the legal entities, as well as his thoughts on compliance within the crypto sector.

Back in September, you initiated a discussion about updating SushiSwap’s legal structure. What was the motive behind the idea?

Sushi’s been throwing the idea of getting legal sorted for some time now. I wanted to take some of the weight off the team & just get to it.

According to the proposal, the purpose of the legal framework is to “provide maximum flexibility for Sushi” to operate while mitigating risks. Are there any current operational bottlenecks within the ecosystem? Can you shed some light on what you mean by “maximum flexibility” and some of the risks that may arise from the activities of Sushi?

Maximum flexibility I think of as ensuring we can go in whatever direction the DAO, chef, or crypto industry takes us. In software there’s the concept of having extensible code. I think of this the same way. Let’s make sure we’re doing the things that closes the fewest doors. Risks are less literal and more if we do A, let’s make sure it doesn’t disqualify us from doing B, C, or D down the line.

Your legal counsel, Fenwick, proposed the creation of three entities in Panama and the Cayman Islands. Why were these locations chosen? Are there any plans to create more entities?

There’s a ton of reasons why they’ve recommended it. Taking into account our current activities and product roadmap along with the context of what the countries regulatory stance is toward these activities, taxation, along with the unique history of Sushi. I have heard a number of attorneys refer to this approach as the current “DeFi standard”.

The Sushi legal structure will comprise a DAO Foundation, a Panamanian Foundation, and a Panamanian Corporation. Who oversees the activities of these entities, and how will members of these entities be chosen?

The DAO will oversee this stuff. The great part about it all is that governance & voting & the community will be the way key persons are chosen. Similar to how the folks that sit on the multisig are being voted in.

Discussions about regulatory compliance in the crypto industry have been on for a while. Regulators, particularly the United States SEC, have targeted a number of crypto businesses. Do these entities put you in a position to comply with existing regulatory policies? What happens if there are state-level threats against your products and services?

There’s no “me”. Where sushi goes is entirely up to the will of the token holders & community. That’s how things work. So what sushi decides to do, conform to or rebel against is entirely decided by the community and token holders via the governance process.

Virtually every member of the DAO voted in support of the proposal. What are the next steps moving forwards?

Executing and implementing the entities & structure outlined.

Given the growing spate of regulatory clampdowns on crypto-based businesses, do you think that players within the space will be able to operate anonymously? Is compliance not against the decentralized ethos?

This is my personal opinion and in no way representative of sushi or the community but I think anonymity can and will exist. With that being said, you’ll likely see a short-term shift where more folks do publicly disclose their identities as crypto goes more mainstream. There was a desire for the sushi chef to be doxxed. With that being said, I think anon culture will continue & evolution in self sovereign identity will make it easier for anons to be trusted & accepted. Re: compliance is all relative to cultures, jurisdictions, etc. I do not believe decentralization implies default noncompliance.

What other DAO projects should we keep attention to? Maybe you are also participating in other DAOs that are worth watching closely?

Check out Klima DAO a sushi partner. They’re doing cool work with tokenized carbon offsets.

How do you keep track of DAO news? Maybe you can recommend news channels or influencers.

I get most of my crypto news from crypto twitter. I’ll shout out: 0xdecefi - small account but does quick threaded summaries of projects in crypto.