Compliance & Regulatory

Document ID: HWC-CR-2025-001 Version: 1.0 Date: Q3 2025 (Projected) Classification: Official & Sensitive

1.0 Introduction: The Foundational Imperative of Proactive Compliance

The Hello World Co-Op DAO Ecosystem is meticulously designed as a pioneering framework, merging decentralized finance (DeFi) with comprehensive education and regenerative economics, addressing challenges that neither traditional cooperatives nor typical crypto projects could solve in isolation. Given the strict legal and financial liabilities inherent in this ambitious project, regulatory compliance is not an afterthought, but a foundational and meticulously "built-in from the ground up" pillar, rather than being retrofitted. This comprehensive approach is conceived as our "citadel of trust and safety," ensuring unparalleled user safety, legal adherence, and long-term project viability. The ecosystem demands continuous vigilance and adaptability to navigate the dynamic global regulatory landscape.

2.0 Foundational Legal Structure: The Shield for Decentralized Operations

The Hello World Co-Op DAO Ecosystem is legally anchored by a sophisticated multi-entity framework, designed to provide both legal clarity and robust protection for its members and assets.

2.1 Wyoming DAO LLC Wrapper The Cooperative is strategically incorporated as a Decentralized Autonomous Organization Limited Liability Company (DAO LLC) under Wyoming state law. Wyoming's pioneering statutes provide a clear legal identity for DAOs, offering benefits such as limited liability for members, the ability to enter contracts, own property, and maintain fiat accounts.

**Articles of Organization:** These documents conspicuously
include the statutory "NOTICE OF RESTRICTIONS ON DUTIES AND
TRANSFERS", which is vital for informing members that their
rights may differ from traditional LLCs. They also include publicly
available identifiers for core smart contracts such as JoinDAO.sol,
MembershipNFT.sol,
RegisterProposal.sol,
ProposalApproval.sol,
and VoteNFT.sol,
ensuring transparency and a direct link between the legal entity and
its on-chain operations.

Operating
Agreement: This paramount legal document meticulously covers how
DAO resolutions and on-chain voting are formally recognized and
upheld by the legal wrapper. It specifies quorum and supermajority
requirements for major decisions (acting as anti-"whale"
mechanisms), defines/modifies fiduciary duties while upholding good
faith, and outlines clear procedures for amending smart contracts,
always requiring DAO approval for material changes.

Ultimate
Beneficial Owner (UBO) Transparency: The legal wrapper is
subject to UBO reporting, necessitating KYC checks for individuals
with significant voting power or control, such as signatories of
multi-signature wallets (e.g., TreasuryManager.sol,
GovernanceMultisig.sol)
or key roles in oversight committees.

2.2 Non-Profit Community Land Trust (CLT) Complementing the DAO LLC, a Non-Profit Community Land Trust acts as a separate legal entity, crucial for holding physical property assets (land and buildings) "in perpetuity for community benefit". This legally shields physical assets from speculative market forces, preventing speculative resale, ensuring enduring access and affordability across generations, and offering potential property tax exemptions.

3.0 Proactive Regulatory Compliance Framework: Navigating the Web3 Landscape

The Hello World Co-Op adopts a comprehensive, multi-layered approach to regulatory compliance, anticipating and addressing evolving global regulations from the outset.

3.1 Virtual Asset Service Provider (VASP) Classification and Obligations The operations of the Hello World Co-Op—particularly the Co-Op Marketplace facilitating multi-currency payments (including fiat-to-crypto conversion) and Otter Camp accepting fiat donations—will likely classify us as a Virtual Asset Service Provider (VASP) under Financial Action Task Force (FATF) standards. The FATF employs an expansive "functional approach," meaning the nature of the activity determines classification, not self-description (e.g., "DeFi"). Entities with "control or sufficient influence" over DeFi arrangements may also qualify as VASPs.

**Pre-Launch Compliance:** AML/CFT compliance is "built-in"
*prior* to the launch of any new product or service, including
sanctions compliance during design and beta testing. Comprehensive
risk assessments are undertaken *before* the software or
platform's launch or use to ensure mitigation measures are in place
before seeking registration or licensing.

3.2 FinCEN Money Services Business (MSB) Registration We are proactively prepared to register as a FinCEN Money Services Business (MSB) if deemed necessary for handling stablecoin or fiat transactions. This involves implementing a robust Anti-Money Laundering (AML) compliance program, designating a Compliance Officer, continuously monitoring transactions, filing Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs), and adhering to strict record-keeping requirements.

3.3 State Money Transmitter Licenses We meticulously acknowledge the potential need for state-level money transmitter licenses in all U.S. states where our operations (e.g., fiat on/off-ramps for the Marketplace or Otter Camp) might trigger such requirements. The costs associated with obtaining these licenses can be substantial and are fully accounted for in our expanded budget projections.

3.4 Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) Program Our ethical commitment, including a "zero-tolerance policy for exploitative or unethical labor and trade practices," underpins our AML/CFT efforts.

**Risk-Based Approach (RBA):** We are committed to identifying,
understanding, and assessing ML/TF and proliferation financing (PF)
risks associated with virtual asset activities *prior* to
launch or use.

Customer Due
Diligence (CDD) & Know Your Customer (KYC):



	Mandatory for
	all DAO-vetted vendors on the Co-Op Marketplace, who are subject to
	identity verification and compliance checks in accordance with law.

	CDD processes
	are risk-based, with a threshold of USD/EUR 1,000 for occasional
	VASP transactions. Enhanced Due Diligence (EDD) is applied to
	higher-risk relationships (e.g., Politically Exposed Persons,
	high-risk jurisdictions).

	We emphasize
	ongoing due diligence and scrutiny of transactions to identify
	changes in customer profiles. Technical implementation may utilize
	"on-chain KYC solutions" or "Decentralized Identity
	(DID) Protocols".



Transaction
Monitoring: Robust systems, including on-chain analytics tools
and AI-powered analytics, for real-time monitoring to detect
suspicious activities and identify connections to sanctioned
addresses. This allows us to flag high-risk transactions (e.g.,
large sums, rapid movements, obfuscation techniques). Monitoring
depth is adjusted based on institutional risk assessment and
customer risk profiles, including transactions to/from unhosted
wallets.

Record-Keeping
(FATF Recommendation 11): Adherence to FATF Recommendation 11,
requiring maintenance of all transaction and CDD records for at
least five years, in a way that allows reconstruction and swift
provision to authorities. Critically, reliance *solely* on the
blockchain for record-keeping is insufficient.

Suspicious
Transaction Reports (STRs) and Regulatory Reporting: A
Compliance Officer is designated to monitor transactions and file
STRs with the Financial Intelligence Unit (FIU) for suspicious
activity. Reporting mechanisms may be updated to include device
identifiers, IP addresses, VA wallet addresses, and transaction
hashes.

3.5 Travel Rule (FATF Recommendation 16) Implementation Strategy The Hello World Co-Op is prepared to implement the FATF 'Travel Rule' (Recommendation 16), which requires originating VASPs to "obtain, hold, and transmit required originator and beneficiary information, immediately and securely, when conducting VA transfers" above a USD/EUR 1,000 threshold. This applies to all VA transfers treated as cross-border qualifying wire transfers.

**Technical Solutions & Interoperability:** We are developing
and documenting specific *technological solutions* for secure,
immediate information transmission between VASPs, ensuring
interoperability of systems. This information does *not* need
to be attached directly to the VA transfer on the blockchain.

Counterparty
VASP Due Diligence: This also includes detailed protocols for
conducting three-phase due diligence on counterparty VASPs to assess
their AML/CFT controls and avoid dealing with illicit actors. This
involves determining if the transaction is with a counterparty VASP,
identifying the specific VASP, and assessing their AML/CFT controls,
regulated status, audit reports, and ability to protect sensitive
information.

Screening
and Hold: VASPs may screen required VA transfer information
separately from direct settlement and may "put a wallet on hold
until screening is completed".

3.6 Unhosted Wallet Interaction Policy Given D.O.M. supports P2P transactions, we have a clear policy for managing ML/TF risks associated with transactions to/from unhosted wallets, potentially involving enhanced due diligence, limiting certain types of transactions, or utilizing blockchain analytics tools.

3.7 Sanctions Compliance (OFAC) A tailored, risk-based sanctions compliance program, developed prior to launching products, ensures adherence to OFAC regulations. This includes management commitment, pre-launch risk assessment, robust internal controls (e.g., geolocation/IP blocking), continuous screening against the Specially Designated Nationals (SDN) list, and leveraging blockchain analytics to identify and block transactions associated with sanctioned persons or entities.

3.8 SEC No-Action Letter Pursuit for D.O.M. Token A critical, active, and ongoing effort is pursuing an SEC No-Action Letter to affirm the D.O.M. token's status as a utility token, not a security. This is a deliberate and essential design choice, reinforced by the D.O.M. token explicitly having NO governance role whatsoever, with voting rights exclusively tied to non-transferable, soulbound Membership NFTs and time-bound voting tokens. We continuously stress that this is an active effort and its success is not guaranteed, maintaining rigorous "no investment expectation" communication in all marketing.

4.0 Smart Contract Compliance & DAO Governance Frameworks

The Hello World Co-Op's governance and operational functions are automated by a robust suite of modular smart contracts, meticulously designed to embed compliance and accountability. While smart contracts automate transactions, they are not AML-compliant by default and cannot unilaterally reject illicit transactions once deployed. Therefore, our strategy meticulously embeds AML/CFT rules where feasible.

**Embedding AML/CFT Rules into Smart Contracts:**



	EthicsCompliance.sol
	automatically checks marketplace transactions against ethical
	criteria, potentially blocking disallowed products (e.g., banned
	items, lacking required ethical certification). This contract is
	vital for enforcing our zero-tolerance policy for unethical
	practices.

	VendorRegistry.sol
	ensures only DAO-approved vendors can list products on the Co-Op
	Marketplace, performing identity verification and compliance checks
	(KYC/AML).

	Multi-signature
	wallets, managed by contracts like TreasuryManager.sol,
	are used to review and approve high-risk transactions, requiring
	multiple approvals for large withdrawals.



Continuous
Audits: We commit to continuous, rigorous third-party security
and compliance audits for all core smart contracts, especially those
handling funds and governance. Our roadmap includes a "Smart
Contract Audit for Alpha" in Q4 2025. Smart contracts are
designed with modularity for easier upgrades and modifications
(subject to DAO approval), and emergency hotfixes require prompt DAO
reporting and retroactive ratification.

DAO
Governance Alignment with AML:



	Community-driven
	decisions are designed to support AML compliance efforts. The DAO's
	charter and bylaws are rooted in fundamental human rights and
	ethical principles.

	Compliance is
	enforced through transparent and auditable governance processes,
	including automated actions like disabling vendor status, burning
	staked tokens for severe violations, or transaction reversals,
	which are binding decisions.

	A transparent,
	multi-tiered conflict resolution process, managed by the
	ConflictResolution.sol
	smart contract, handles reporting, investigation (Tier 1 & 2),
	and DAO resolution (Tier 3), ensuring fairness and due process.



Anti-Manipulation
Mechanisms: Rigorous "anti-sybil and 'anti-whale'
mechanisms" are explicitly in place to safeguard against
manipulation and undue influence, ensuring equitable "1 Member
= 1 Vote" governance.

5.0 Global Accessibility and Localized Compliance

The Hello World Co-Op operates globally with a mobile-first, multi-language strategy for worldwide adoption, actively navigating varied international regulatory landscapes.

**Localized Pathways:** We develop "localized pathways"
where membership might be via a local cooperative entity connected
to the DAO to satisfy diverse local laws and cultural contexts.

Platform
Adaptability: Our mobile app can detect regions and adjust its
backend accordingly (e.g., using custodial backends or fiat
interfaces in countries with crypto restrictions), aiming to
"include users while respecting local regulations, turning
compliance into just another layer of the tech stack handled by the
platform rather than the user".

International
Cooperation: We emphasize international cooperation and
standardized frameworks (like MiCA, FATF, IOSCO, OECD) for effective
global crypto regulation. Our "cross-DAO federation"
strategy aligns with this, fostering collaboration to share
resources and co-govern initiatives.

6.0 Comprehensive Documentation and Expert Engagement

Compliance requires not only robust systems but also clear communication and specialized expertise.

**Clear Documentation:** We ensure clear, concise, and accessible
documentation, including dedicated compliance sections in our
whitepaper, plain-language summaries for complex legal clauses, and
workflow diagrams. A living FAQ document specifically focused on
compliance, AML, KYC, sanctions, and VASP regulation will provide
straightforward answers.

Internal
Training and Education: Internal training materials on
compliance procedures and security protocols are developed for the
team. The "Rabbit Whole" platform's "learn-to-earn"
curriculum can create modules on compliance, ethical practices, and
the legal framework, incentivizing members to understand and uphold
these principles.

Expert
Legal Counsel and Budget: We acknowledge the significant legal
and compliance costs, estimated to range from $70,000 to
$310,000+ for initial setup, and commit to an expanded legal and
compliance budget. Engaging expert legal counsel specializing in
cooperative law, blockchain, and financial regulations is essential
to navigate these complexities and ensure full compliance from the
outset.

7.0 Key Milestones and Ambitious Impact Targets

Our roadmap is meticulously planned, ensuring compliance and core product development from the outset, with key regulatory milestones integrated at each phase.

**Q3 2025 (Phase 1):** Focus on Legal and Compliance Framework
Reinforcement, including SEC No-Action Letter pursuit, FinCEN MSB
registration preparedness, and KYC/AML policies.

Q4 2025
(Phase 2): Preparations for Alpha and Testnet Launches,
including Risk-Based AML/CFT Program Implementation, Multi-Signature
Wallet Configuration, Accounting and Tax Record-Keeping
Infrastructure, and Smart Contract Audit for Alpha.

**Q1 2026:**
Beta Launch (Co-Op Marketplace + Sigil System fully implemented).

**Q2 2026:**
Public Launch (Hello World Co-Op Ecosystem officially launches,
permissionless access).

Ambitious
Impact Targets: We aim for 100 organizational partners by
launch, **50 million users within 18 months** (a significant
increase from initial projections), and over $1 billion in
real-world asset (RWA & RCC’s) funding for sustainable
infrastructure within 36 months. These targets underscore our
commitment to global, tangible impact and are supported by our
scalable infrastructure and compliance-driven design.

8.0 Conclusion: Continuous Vigilance for a Regenerative Future

The comprehensive and granular compliance strategy detailed herein demonstrates that the Hello World Co-Op DAO Ecosystem is not merely an innovative concept but a meticulously constructed framework designed with integrity and resilience at its very core. Every component, from our dual-entity legal structure and on-chain governance to our ethical enforcement via smart contracts and proactive regulatory engagement, is deliberately engineered to mitigate liabilities, provide robust protections, ensure transparency, and foster a truly community-centric, regenerative future. This unwavering commitment to safety and compliance is paramount as we build a world where living, learning, trading, and building become acts of collective healing and conscious creation.