Wyoming Governor Mark Gordon has signed a bill into law, marking a significant milestone in establishing a legal framework for decentralized autonomous organizations (DAOs) within the state. Sponsored by the Legislature’s Select Committee on Blockchain, Financial Technology, and Digital Innovation Technologies, the bill introduces legal status for Wyoming’s decentralized unincorporated nonprofit associations (DUNAs). Issued on March 7, the document delineates the requirements for forming DUNAs, emphasizes the role of smart contracts, and outlines the legal responsibilities of the association and its members.
Under the new law, DUNAs are recognized as separate legal entities distinct from their individual members. This delineation means that a DUNA can be held liable for breaches of contract or other legal obligations without implicating its individual members. The legislation seeks to provide clarity and legal protections for participants involved in decentralized governance structures, mitigating potential liability concerns.
A DAO operates without centralized leadership, relying on bottom-up decision-making processes governed by rules enforced through blockchain technology. By granting legal recognition to DAOs, the new law enables these decentralized entities to engage in various activities, including entering into contracts with third parties, establishing bank accounts, fulfilling tax obligations, and meeting information reporting requirements.
Contrary to some interpretations, the bill does not restrict Wyoming-based DAOs from engaging in for-profit activities. Venture capital firm a16z crypto, in a March 8 analysis, clarified that both unincorporated nonprofit associations (UNAs) and DUNAs under Wyoming law have the flexibility to pursue for-profit endeavors. This flexibility allows Wyoming-based DAOs to participate in a wide range of activities, including decentralized exchange protocols and social media protocols, while still adhering to legal guidelines.
Moreover, the analysis highlighted that Wyoming's approach aligns with the principles of web3 while facilitating cash flow to digital asset holders. This development is seen as a significant breakthrough in supporting the growth and sustainability of decentralized governance structures within the state and beyond.
