Wyoming Governor Mark Gordon has made history by signing a groundbreaking bill into law that paves the way for the establishment and management of decentralized autonomous organizations (DAOs) in the state. The Decentralized Unincorporated Nonprofit Association Act, which received bipartisan support in the House with a 50-10 vote, sets out the requirements for forming a DUNA and clarifies the roles of smart contracts within these organizations.
This move signifies Wyoming’s commitment to embracing blockchain technology and creating a structured framework for DAO operations. Under the new law, which will come into effect on July 1, 2024, DAOs with a minimum of 100 members can become unincorporated nonprofit associations. One of the key features of the legislation is that it recognizes a DUNA as a separate legal entity from its members, providing liability protection for individual members in case of contract breaches.
DAOs operate through decentralized decision-making processes enabled by blockchain technology, allowing them to function without centralized control. This approach gives DAOs the ability to engage in contracts with third parties, open bank accounts, pay taxes, and fulfill reporting requirements. Additionally, DAOs registered as nonprofits can participate in profit-making activities, with the proceeds directed towards achieving the organization’s objectives.
Venture capital firm a16zcrypto has praised the legislation as a significant breakthrough, highlighting the protections it provides for DAOs and its support for the ethos of web3. Miles Jennings, general counsel at a16z Crypto, emphasized that recognizing DAOs as decentralized unincorporated nonprofit associations (DUNAs) enables cash flows to digital asset holders while upholding the principles of decentralization.
This move by Wyoming sets a precedent for other states to follow in embracing blockchain technology and creating a supportive environment for decentralized organizations. With the new law in place, DAOs in Wyoming will have the legal framework needed to operate effectively and contribute to the growing blockchain ecosystem.
