Fiduciary Duty Fulfillment in Web3: A DAO Investment Framework for U.S. Financial Advisors

Abstract

U.S. financial advisors face significant challenges in fulfilling their fiduciary duties under the SEC’s Regulation Best Interest (Reg BI) when recommending DAO investments. The core pain points concentrate on three aspects: the lack of specialized DAO risk assessment tools, difficulties in regulatory compliance verification, and the absence of standardized methods for client profile matching. Integrating insights from traditional finance-Web3 convergence, DAO governance practices, and professional financial qualifications, this study constructs a Web3 fiduciary duty framework encompassing DAO risk quantification, regulatory compliance verification, client profile matching, and asset custody transparency. The framework generates a standardized score ranging from 1 to 10 through 27 exclusive risk indicators, integrates a multi-agency regulatory requirement verification mechanism, achieves precise alignment between DAO investments and clients’ risk profiles, and ensures full-process transparency via on-chain tracking. Empirical testing across 6 U.S. financial advisory firms and 10 client investment portfolios over 5 months demonstrates that the framework increases DAO risk assessment accuracy by 47.2%, reduces fiduciary duty risk by 68.3%, improves client satisfaction by 35.6%, and shortens due diligence time from 21 days to 5 days. This research fills the theoretical and practical gaps in fiduciary duty fulfillment for Web3 investments, realizes the organic integration of traditional financial fiduciary standards with Web3 technical characteristics, and provides deployable technical solutions and operational guidelines. It aims to unlock $50-60 billion in potential retail capital for DAOs, promote DAO ecosystem innovation while strengthening investor protection, and align with the U.S. orientation toward Web3 retailization.