Wyoming Governor Signs Bill Granting Legal Status to DAOs
The new law enables DAOs to operate within the bounds of existing laws while preserving their decentralized nature.
Wyoming, known for its crypto-friendly legislation, has taken a significant step forward in blockchain governance by granting legal standing to decentralized autonomous organizations (DAOs). Governor Mark Gordon signed the Wyoming Decentralized Unincorporated Nonprofit Association Act, known as DUNA, into law on Thursday, marking a milestone in blockchain regulation, according to a CoinDesk report.
This development marks a significant step forward in Wyoming's efforts to create a conducive environment for blockchain and crypto innovation. Previously, DAOs were permitted to establish themselves as limited-liability corporations in the state. With the introduction of DUNAs, DAOs now have an additional legal avenue to organize and operate.
Miles Jennings, general counsel at a16z Crypto, hailed the move as a "breakthrough," emphasizing the importance of providing DAOs with essential protections and empowering them to maintain open blockchain networks. Jennings highlighted the role of DUNAs in addressing key challenges faced by DAOs, including legal recognition, the ability to enter contracts, appear in court, pay taxes, and obtain limited liability from the actions of other members.
The new law enables DAOs to operate within the bounds of existing laws while preserving their decentralized nature. DAOs will now have legal existence, empowering them to enter contracts, establish bank accounts, appear in court, and fulfill tax obligations. Jennings underscored that the legislation safeguards decentralization and supports the growth of blockchain ecosystems.
The move comes amid increasing regulatory scrutiny of DAOs by U.S. authorities. Last year, the Commodity Futures Trading Commission's case against Ooki DAO set a precedent, highlighting the potential legal liabilities faced by decentralized entities. Wyoming's legislation addresses these concerns by providing legal recognition to DAOs without compromising their operational autonomy.
Wyoming's reputation as a crypto-friendly jurisdiction continues to grow, with the state leading initiatives to create a regulatory environment conducive to crypto businesses. Senator Cynthia Lummis has been at the forefront of advocating for crypto regulation at the federal level, including introducing bills aimed at establishing rules for stablecoin issuers.
Despite federal regulatory scrutiny, particularly from agencies like the U.S. Commodity Futures Trading Commission, Wyoming's proactive approach demonstrates its commitment to supporting blockchain innovation and providing clarity for DAOs operating within its borders. With the establishment of DUNAs, Wyoming solidifies its position as a trailblazer in blockchain governance, setting a precedent for other states to follow suit in recognizing and accommodating decentralized organizations.
