Turbulence in crypto and blockchain has shed light on a question that has received increasing attention: how web3 companies share ownership in digital networks, including through tokens.
As the industry wrestles with this question, builders and investors should consider adding cooperatives to their ownership structures. A handful of web3 projects have done so, but the model is not widely understood in the web3 context.
Credit unions, rural utilities, insurance companies, and agriculture producers often organize as cooperatives. In web3, projects that add cooperatives to their ownership structures could boost participation and reduce regulatory risk while giving users more control of the digital networks they use and a share of the value they create.
The SEC has consistently declined to classify cooperative memberships as securities, enabling cooperatives to distribute ownership to users quickly and easily, while also offering important protections to their members.
A new white paper from Orrick, KPMG and Upside Cooperative explores whether a legal structure common to credit unions and rural utilities could help revitalize blockchain and realize the web3 vision of a new digital world.