Crypto associations operate the digital ledgers known as blockchains. They generally do not choose to organize as traditional legal entities governed by well-established fiduciary duties. Instead, they claim to have no central manager and rely on economic incentive to spur decentralized governance. In litigation, crypto associations have contended that they owe no contractual or other legal obligation to their investors. Many courts have disagreed and found that crypto associations are partnerships or essentially limited partnerships that owe legal duties to purchasers of crypto assets. In doing so, they have rejected a strong version of contractualism that would permit investors to enter an arrangement where they have no rights. Crypto associations highlight an additional reason for legal entities. Not only do entities lock in capital for long-term investment, as noted by corporate law scholars, they also lock in capital to help ensure that enterprises comply with their social obligations. As a substitute for an entity, crypto regulation should require crypto associations that sell crypto assets to the public to designate a party as a Controller that is accountable to crypto investors.
