CR Regions and Why the Travala Suggestion Needs Legal Fees

Since I just posted the new Travala suggestion — https://www.cyberrepublic.org/suggestion/6077fcf5de9a5d0078c16e52 — in response to some community members’ requests some questions I’ve fielded in the community chat, I believe this article is very much needed to explain how the dynamics between the Elastos Foundation (EF) and CR Regions have worked for a while now.

Elastos Teams Have Been Operating Independently

Throughout the previous year, the Elastos Foundation (EF) has been instructing the myriad of teams working under it to form independent teams. That’s why you’ve seen Trinity Tech, Elastos Fusion, CR Regions, Tuum Tech, Elastos Info, and others break off and form their own entities. Technically, nobody except the core EF members have their elastos.org emails any more — not even me.

Even I Am Technically No Longer VP of Development for Elastos

Just as KP and Donnie have moved to Tuum, and Zach and Cassie have moved to Elastos Info, I too am technically the CR Regions Lead only. However, I retain my title with Elastos because there are still compliance and operational relationships I have yet to be able to completely close. For example, exchanges still need an English-speaking and global point of contact for various compliance-related items.

The Project Teams Must Sign Agreements Moving Forward - EF No Longer Signs Agreements

Part of the transition process entails EF will become strictly in charge of infrastructure development until it is completed, and then will become more of a standards committee, much like the W3C. Going forward it’s expected that even the infrastructure maintenance and development will be carried out by Cyber Republic (CR) funded teams.

Since EF is designing itself out of much of the interactions with external entities, their mandate is also to no longer be party to any future agreements or partnerships — which basically means Elastos Foundation no longer will sign anything. After all, entering into new obligations will only make it more difficult to transition to a standards committee, if EF chooses to finally do so.

Therefore, it’s up to the teams and future CR-funded project teams to forge partnerships, sign agreements, and build the Elastos ecosystem themselves.

The Future of EF is Still Undecided

I can no longer speak for EF, but I want to caution that the plan for transitioning to a standards committee is only one of many options on the table. I am not involved in those discussions and would defer to official press releases by Elastos Info.

The Challenges Ahead

Which brings me to challenges I want to bring up ahead of the Clubhouse AMA to bring a bit more context to the discussion.

As I negotiated the Travala listing, some key challenges did arise and will continue to do so:

1. Elastos Foundation won’t sign anything, so CR Regions Ltd. or some other entity must be established to sign. But other entities cannot be liable for any issues with the Elastos platform.
2. Each team needs to retain their own legal counsel to review partnership or collaboration agreements to ensure that they themselves are not liable in case something happens with the Elastos infrastructure.
3. Entities like CR Regions Ltd. need to clarify that the funds originate from Cyber Republic. The external entities we work with must accept the risk that CR — the source of funds — is not a legal entity.
4. Some external entities require agreements to be made with the entity that created the token or that is responsible for the infrastructure. Fortunately in the case of Travala this was resolved, but I still need lawyers to make sure I’m not on the hook should anything go wrong.

If anyone’s curious why the Bittrex Global listing process took so long, the answer lies here. Convincing them that Elastos is sufficiently decentralized such that no one could be held accountable for infrastructure issues was difficult. But arguably we have one of the highest hash-rates in the industry, so that was a small victory of sorts.

But you can imagine how hard it is to list on an exchange when the Elastos Foundation itself refuses to sign agreements. Going forward, what is the solution?

One Idea: Should Cyber Republic Incorporate?

I know there are many that say this is fundamentally against what Cyber Republic stands for, but I do believe decentralized systems and the traditional world can get along. There is no unwritten rule that the two systems cannot coexist, and in fact in the USA two states — Wyoming and Vermont already have set legal systems in place to incorporate DAOs like CR as Blockchain Based LLCs (BBLLCs).

I believe projects, companies, and the real world will be much more receptive to working with Elastos if the Cyber Republic DAO that governs the ecosystem has a proper legal entity, can sign agreements, and assume some accountability.

For example, if I were to deploy my dApp on Elastos, I’d want some assurance at least that if the blockchain were to have issues, that someone would be responsible for addressing those issues. Until now, only Ethereum and Bitcoin have reached the level of decentralization where developers willingly build on them and assume all the risk themselves. Yet even with Ethereum, many companies are funded by Consensys to maintain EVM clients and node software.

So for now I have begrudgingly added legal fees for Travala. I’m really just a middle-man here, so please don’t shoot the messenger. I have done my best here to provide a thorough explanation about why — in this case, and many more times after — CR Regions is a necessary legal entity to support the expansion of the Elastos ecosystem.

FATF Travel Rule Woes

Finally, I do want to point out that the regulators are getting smarter — they’ve caught up in many respects. FATF Travel Rules released March 2021 have guidance that broadly defines Virtual Asset Service Providers (VASPs), specifically stating that dApp operators and shareholders of DAOs like Uniswap/MakerDAO could be defined as VASPs. This means that if Cyber Republic is deemed a VASP, it will need to be properly incorporated and adopt an AML/KYC policy. Actually, I had seen this coming from a mile away, as it’s not very difficult for someone to create a fake proposal and receive funds. If CR has no KYC/AML policy in place and accidentally funds a terrorist, who’s held accountable? If I were a CR Council member I might want some liability protection and a proper KYC policy in place, because if some ELA ends up in the wrong hands, legally exposed CR council members in the US/EU are easy targets. Just some food for thought.

What’s Next?

I think the new incoming CR Council needs to take legal matters more seriously, CR Regions has been working with some legal contacts lately to come up with ideas to present. Whether they are taken up on or not is up to the community, but it’s a discussion we should be having nevertheless.

Sincerely,

Clarence
CR Regions Lead