Key Takeaways
- The bill passed with bipartisan support in the House in a 50-10 vote
- The law details DUNA formation requirements, delineates smart contract roles
Wyoming Governor Mark Gordon has signed a groundbreaking bill into law, laying the groundwork for the establishment and management of decentralized autonomous organizations (DAOs). This move marks a significant step forward in the state’s embrace of blockchain technology.
The legislation, known as the Decentralized Unincorporated Nonprofit Association Act, received widespread support in the Wyoming House, passing with a vote of 50-10 on Monday. It was sponsored by the legislature’s special committee on blockchain, financial technology, and digital innovation, aiming to provide a structured framework for DAO operations.
Under this new law, which will take effect on July 1, 2024, DAOs with a minimum of 100 members can become unincorporated nonprofit associations. The bill outlines specific requirements for forming a DUNA and further clarifies the roles of smart contracts
A key feature of the legislation is that it recognizes a DUNA as a distinct legal entity from its members. This means that individual members are shielded from liability for any breaches of the association’s contracts, allowing DAOs to engage in contracts with third parties, open bank accounts, pay taxes, and fulfill reporting requirements.
In contrast to traditional organizations with centralized leadership, DAOs operate through decentralized decision-making processes facilitated by blockchain technology. This decentralized approach enables DAOs to function without central control, with governance guided by a set of rules enforced by the blockchain.
The new law also permits DAOs registered as nonprofits to engage in profit-making activities, as long as the proceeds are directed back to achieving the nonprofit’s objectives. Additionally, DAOs are granted the ability to acquire and transfer property, including tokens, to facilitate their operations.
In response to the legislation, venture capital firm a16zcrypto hailed it as a significant breakthrough. Miles Jennings, general counsel at a16z Crypto, emphasized that the recognition of DAOs as decentralized unincorporated nonprofit associations (DUNAs) provides much-needed protections and supports the ethos of web3 while enabling cash flows to digital asset holders.
