Wyoming passes bill recognizing DAOs as legal entities 

The State of Wyoming passed a landmark crypto bill to bring DAOs under the purview of existing laws and address pain points synonymous with decentralized organizations. 

Wyoming governor Mark Gordon approved a March 7 state bill acknowledging decentralized autonomous organizations (DAOs) as legal entities under the Decentralized Unincorporated Nonprofit Association Act (DUNA). The law will come into effect on July 1.

Unlike traditional corporate operations, DAOs are community-operated and provide decision-making privileges through crypto governance tokens collectively held by members.

The concept ultimately fostered a legal problem for participants and regulators alike. Tokens created by entities were likened to company shares, and thus scrutinized using securities laws, while members were subject to encompassing litigation action. 

This was evident in the Commodity Futures Trading Commission’s (CFTC) lawsuit against Ooki DAO. The CFTC accused the organization of running an unregistered trading venue and moved to hold all Ooki token holders liable for the DAO operations. 

DUNA creates a haven for DAOs

Wyoming’s DUNA bill addresses these issues by leveraging the unincorporated nonprofit associations model, allowing decentralized organizations to generate revenue and distribute earnings to members, while maintaining legal existence as a nonprofit entity. 

DUNA empowers these organizations to appear in court under legal representation and contract with third parties. Under Wyoming law, DAOs can now pay taxes, and members are protected through limited liability policies. This means that members may not be held responsible for the actions of other members or the whole organization. 

Andreessen Horowitz’s (a16z) crypto general counsel, Miles Jennings, remarked that DUNA arrived at a critical junction for crypto and will solve key challenges previously faced by these decentralized organizations. A16z supported the bill’s developments and regards its passing as a watershed moment for all of web3. 

“Wyoming’s new law will enable blockchain projects to operate within the bounds of applicable laws without compromising their decentralization. It also keeps them permissionless. This is a major breakthrough.”

Miles Jennings, a16z crypto general counsel