Wyoming Grants Legal Status to Decentralized Autonomous Organizations (DAOs)

In an unprecedented move, Wyoming has passed a law giving Decentralized Autonomous Organizations (DAOs) legal status, effective from July 2024.

This landmark decision not only recognizes the unique structure of DAOs but also addresses legal challenges, offering protection and enabling smoother operations within the legal framework.

Explore the significance of this law and how it paves the way for future advancements in blockchain and digital asset management.

A New Milestone for DAOs in Wyoming, USA

On March 7, 2024, a groundbreaking law was passed in Wyoming, USA, conferring legal status on Decentralized Autonomous Organizations (DAOs), with the law set to take effect on July 1, 2024.

DAOs operate on a non-centralized basis without specific owners or administrators and have become increasingly popular in the cryptocurrency sector.

Wyoming made headlines in April 2021 by officially recognizing the incorporation of DAOs with the approval of the "DAO Law," and in July of the same year, it was reported as the first state in the US to permit the incorporation of a DAO.

The latest legislation focuses on the creation of Decentralized Nonprofit Non-Corporate Entities (DUNAs).

The Significance of the DUNA Legislation

The recently passed legislation sheds light on the formation and importance of Decentralized Nonprofit Non-Corporate Entities (DUNAs).

Based on the model of existing Nonprofit Non-Corporate Entities (UNAs), DUNAs introduce a new category specifically designed for decentralized, non-centralized organizations.

DUNAs play a crucial role in addressing legal and regulatory issues faced by DAOs, allowing for the operation and protection within the legal framework without hindering the decentralization aspect of blockchain technology.

This enables DAOs to maintain an open blockchain network while providing protection mechanisms.

Legal Recognition and its Importance

The importance of the new law lies in granting legal status to DUNAs, enabling DAOs to offer liability protection to their members, enter into contracts with third parties, open bank accounts, and pay taxes.

Previously, DAOs without corporate status faced the risk of being deprived of legal recognition, unable to fulfill tax obligations, and exposed to potential liabilities. The DUNA legislation addresses these challenges, facilitating project developments in the US.

DUNAs are designed to preempt multiple issues that could arise in relation to DAOs, solving significant challenges faced by DAOs and significantly reducing the risks for DAO members.

Under Wyoming law, both UNAs and DUNAs can engage in profit-making activities, including operating decentralized exchange protocols and decentralized social media protocols.

DAOs are also permitted to compensate members for participating in governance processes.

The enactment of this law represents a significant advancement in respecting the Web3 ethos while enabling cash flows to digital asset holders.

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