Blockchain Technology: Limited Liability Companies and the Need for North Carolina Legislation
In the last few years, a new, technology-driven organizational structure has arisen in response to changing conceptions of trust: the block-chain-based LLC (BBLLC). Much like the LLC from which they take their name, these entities were adapted to provide unique advantages in the modern business environment. By coupling traditional LLC notions with an existence on a peer-to-peer blockchain network as a series of smart contracts, they allow their members and managers to leverage low-cost and intermediary-free interaction with each other and with other customers and businesses. As blockchain networks generally do, instead of grounding stakeholder reliance on the traditional “trust” generated by human relationships, BBLLCs rely mostly on the proof-of-work concept embedded within blockchain technology—digital ledgers, circulated to all members as well as interested transactional parties that provide a verified history of all transactions within a particular node’s block—to ensure the validity and accuracy of the organization’s operations. More simply, they allow business to be done faster, cheaper, and safer. These benefits aside, most states do not recognize BBLLCs as legal business organizations. And in these states, BBLLCs are instead simply known as decentralized autonomous organizations (DAOs). But it is becoming clear that more state legislation is needed to resolve the pressing legal and practical is-sues of non-recognition and general operations. And North Carolina has a unique opportunity to address these issues by leveraging the insights sure to be gained from its 2021 FinTech and InsurTech “regulatory sand-box” to develop a BBLLC Act of its own. Already positioned as a leader in its own right in the technology space, North Carolina should follow the lead of Wyoming and Vermont and take its place at the trailhead for the next evolutionary step of business organizations.
Kyle A. Conway, Blockchain Technology: Limited Liability Companies and the Need for North Carolina Legislation, 45 Campbell L. Rev. 127 (2022).