Wyoming Establishes Legal Recognition for DAOs

By: Eva Baxter

Wyoming, a US state, has passed a groundbreaking law granting legal recognition to blockchain-based decentralized autonomous organizations (DAOs). The Decentralized Unincorporated Nonprofit Association Act (DUNA) was signed on March 7 and is due to come into force on July 1. The law will apply to eligible non-profit organizations that establish governance systems based on distributed ledger tech, including blockchain, digital assets, and smart contracts.

The law was welcomed by major industry actors, notably the division of crypto expertise at Andreessen Horowitz (a16z), which committed to promoting Wyoming as a base for its relevant portfolio companies. Paul Grewal, Chief Legal Officer at Coinbase, posited that states like Wyoming serve as 'critical sources of innovation and inspiration.' This significant step also comments on the intersection of decentralization and legislation.

Previously, DAOs had been treated similar to member-managed LLCs by certain states, an approach some felt didn't fully capture the unique characteristics of DAOs. Shifting away from the LLC model is seen by many as vital in capturing the actual structure of these entities, often composed of anonymous members and profoundly different from traditional businesses. This law is seen as a stride in the right direction to better accommodates these differences.