Wyoming Establishes New Legal Framework for DAOs, a16z Highly Optimistic about this Development, Hopes for Adoption by Majority of DAOs, to be a Condition for Future a16z Investments.
Table of Contents
Toggle
Ohio Legislation Turns DAOs into Legal Entities
a16z Crypto: Major Breakthrough, Voters No Longer Held Accountable
Biggest Challenge: Convincing DAOs to Adopt New Structure
Ohio Legislation Turns DAOs into Legal Entities
According to Fortune Magazine, Governor Mark Gordon of Wyoming has signed the state law “Decentralized Unincorporated Nonprofit Association Act” to further regulate the growing DAOs in the state.
DAOs can now function as unincorporated nonprofit associations and the effective date is July 1, 2024.
Advertisement – Continue scrolling for more content
Note: The bill is called the Decentralized Unincorporated Nonprofit Association Act (DUNA).
a16z Crypto: Major Breakthrough, Voters No Longer Held Accountable
Miles Jennings, General Counsel of a16z Crypto, wrote that this legislation provides much-needed protection for DAOs and allows them to remain open to the blockchain network.
The main issues it addresses are:
Granting legitimacy to DAOs
Imposing tax obligations on DAOs
Providing limited liability protection for members (free from legal responsibility for the actions of other members)
Miles Jennings mentioned:
The purpose is not to create profits for DAOs (although DAOs can still generate income and distribute it to members). If a DAO violates the law, this structure will not prevent regulatory enforcement; on the contrary, it allows DAOs to hire legal counsel and appear in court. This also means that voters in a DAO are not necessarily held accountable for the actions of the DAO, just like Enron shareholders are not responsible for the company’s fraud.
Biggest Challenge: Convincing DAOs to Adopt New Structure
Miles Jennings mentioned that currently, this structure would attempt to avoid the tricky question of whether cryptocurrencies are classified as securities. He believes that since DAOs do not have directors, officers, or a mission to maximize profits, tokens should not be classified as securities.
However, he also admits that this structure may still not escape the attention of the SEC.
He points out that the biggest challenge at the moment may be convincing existing DAOs to adopt the new structure:
a16z Crypto plans to collaborate with and make it a condition (to adopt the new DAO structure) for future investments in projects they have worked with and invested in.
ChainNews’ First Reader Meetup at Ramble Bar | All About the Cancun Upgrade:
ChainNews’ physical event “Ramble Bar” invites Martinet and Anton, core organizers of ETHTaipei 2024, to chat with readers about the future impact of the Cancun upgrade on Ethereum and Layer2, with a chance to win free tickets to ETHTaipei.
Readers are welcome to join us on March 14th (Thursday) for the offline gathering!
Registration link:
https://abmd.pse.is/5nz688
a16z Crypto
DAOs
Miles Jennings
Further Reading
“DAO Governance” Difficult to Support Technical Decisions, Gitcoin Announces Restructuring and Establishment of Labs
Ethereum Founder Vitalik Buterin’s Article: Prospects and Challenges of Integrating AI with Blockchain