The governor of Wyoming this week signed legislation greenlighting the legal status of decentralized autonomous organizations (DAOs).
The legislation takes effect July 1 and establishes “decentralized unincorporated nonprofit organizations” (DUNAs) in the state.
Miles Jennings, general counsel at digital asset-focused venture capital a16z crypto, say the new law is “game-changing” for web3.
“Wyoming’s new law will allow blockchain projects to operate within the boundaries of applicable laws without compromising their decentralization. It also keeps them without consent. This is a major breakthrough.
Crucially, the bill addresses three key challenges facing DAO:
- it gives them a legal existence, allowing them to enter into contracts with third parties;
- it allows them to pay taxes; And
- it provides limited liability for the actions of other members.”
Jennings says the new legislation will not expose consumers to additional risks and will not impact the way DAOs are currently launched and operated.
The lawyer also believes that DUNAs can strengthen the argument that digital assets are not securities.
“For example, the use of a DUNA significantly strengthens the arguments that the Howey third is dissatisfied with respect to transactions in that DUNA’s digital assets. First, the DUNA is an inherently decentralized entity whose basic structure does not include a management function. There are no officers or directors. Second, DUNA members have no legal obligations or rights regarding the maximization of the organization’s profits.”
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Generated image: Midjourney