Wyoming Embraces Blockchain-Based DAOs as Legal Entities

Wyoming Embraces Blockchain-Based DAOs as Legal Entities

Wyoming has recently made a significant move by passing a law that recognizes blockchain-based decentralized autonomous organizations (DAOs) as legal entities. This step is seen as a major milestone in the world of cryptocurrencies and blockchain technology. The bill, known as the Decentralized Unincorporated Nonprofit Association Act (DUNA), was signed by the Governor on March 7 and is set to go into effect on July 1.

The legislation does not explicitly mention DAOs but rather focuses on enabling eligible nonprofit organizations to establish governance systems based on distributed ledger technology (DLT), which includes blockchain, digital assets, and smart contracts. DAOs utilize these systems to facilitate community voting on governance proposals. The bill also highlights the importance of membership interests and voting rights being transferable between individuals, often achieved through the use of transferable crypto tokens in the voting process.

The law passed by Wyoming has garnered praise from industry experts and players, including a16z, a division of Andreessen Horowitz. They have expressed their support for the law and have indicated that they will encourage their portfolio companies with a decentralized structure to incorporate in Wyoming. This move is expected to set a new industry standard for blockchain networks operating in the US. Furthermore, other prominent figures in the crypto space, such as Coinbase’s chief legal officer, have commended Wyoming for being a source of innovation and inspiration in the regulatory landscape.

Comparison with Other States

In comparison to other states like Vermont and Tennessee, which still treat DAOs as LLCs, Wyoming’s new law represents a significant departure from the traditional model. By recognizing the unique characteristics of DAOs, such as anonymous membership and decentralized governance, Wyoming’s legislation addresses the limitations that have hindered DAOs’ compliance with financial and regulatory requirements in the past. This forward-thinking approach is expected to pave the way for more states to follow suit and create a conducive environment for blockchain innovation.

Wyoming’s decision to embrace blockchain-based DAOs as legal entities marks a significant development in the regulatory landscape for cryptocurrencies and decentralized technologies. By recognizing the unique attributes and needs of DAOs, Wyoming has positioned itself as a leader in fostering innovation and providing a supportive framework for the growth of blockchain networks. It remains to be seen how other states will respond to this groundbreaking legislation and whether they will follow Wyoming’s lead in recognizing DAOs as legitimate entities in the eyes of the law.

Regulation

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