Wyoming’s governor signed legislation this week greenlighting the legal status of decentralized autonomous organizations (DAOs).
The legislation becomes effective on July 1st and establishes “decentralized unincorporated nonprofit associations” (DUNAs) in the state.
Miles Jennings, the general counsel at the digital asset-focused venture capital a16z crypto, says the new law is “game-changing” for 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.
Critically, the bill solves three key challenges DAOs face:
- it gives them legal existence, enabling them to contract with third parties;
- it enables them to pay taxes; and
- it provides limited liability from the actions of other members.”
Jennings says the new legislation won’t expose consumers to any additional risks and doesn’t interfere with how DAOs are currently launched and operated.
The lawyer also believes that DUNAs could strengthen the argument that digital assets aren’t securities.
“For example, the use of a DUNA substantially strengthens arguments that the third prong of Howey is not satisfied with respect to transactions in the digital asset of that DUNA. First, the DUNA is an inherently decentralized entity form whose baseline structure does not include a management function. There are no officers and directors. Second, DUNA members have no statutory obligations or rights with respect to the maximization of the organization’s profits.”
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