The State of Wyoming recently passed a significant crypto bill that brings decentralized autonomous organizations (DAOs) under existing laws to address key issues faced by these innovative entities.

Wyoming Recognizes DAOs as Legal Entities

Wyoming Governor Mark Gordon approved a state bill on March 7, recognizing DAOs as legal entities under the Decentralized Unincorporated Nonprofit Association Act (DUNA). This law will go into effect on July 1, providing much-needed clarity for DAO operations.

What Are DAOs?

Unlike traditional corporations, DAOs are community-operated organizations that utilize crypto governance tokens for decision-making. However, this unique structure posed legal challenges as tokens were viewed as securities, leading to regulatory scrutiny and potential litigation against members.

Wyoming’s Solution with DUNA

Wyoming’s DUNA bill offers a solution by allowing DAOs to operate as unincorporated nonprofit associations. This framework enables DAOs to generate revenue, distribute earnings to members, and maintain legal status as nonprofit entities. Members are also protected through limited liability policies, ensuring they are not personally liable for the actions of the organization.

Impact on the Crypto Industry

Industry experts, like Andreessen Horowitz’s crypto general counsel, Miles Jennings, view DUNA as a critical development for the crypto sector. This new law provides much-needed legal clarity for DAOs, allowing them to operate within the bounds of the law while maintaining decentralization and permissionless attributes.

“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,” said Miles Jennings.

Future Adoption and Support

The law will come into effect on July 1, 2024, with plans for support and adoption by DAOs and startups associated with entities like Andreessen Horowitz. This move aims to provide certainty to web3 builders, allowing them to focus on innovation and growth in the crypto space.

For more insights on DAOs and the evolving crypto landscape, stay tuned to Global Crypto News.

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