Crypto’s New Frontier: Wyoming Shatters Barriers With New DAO Legislation

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According to a report by Fortune Magazine, the state of Wyoming is looking to solidify its position as a crypto-friendly state with the recent signing of the Decentralized Unincorporated Nonprofit Association Act.

The legislation establishes a legal framework for Decentralized Autonomous Organizations (DAOs) and addresses a significant challenge in fitting these entities into existing financial regulations, as increased scrutiny of the nascent crypto industry becomes paramount.

The move demonstrates Wyoming’s increased intent to foster blockchain innovation and attract new blockchain companies to the state.

Wyoming Pioneers Crypto-Friendly Environment In The US

According to the report, Wyoming has long positioned itself as a leading state for the industry, similar to Delaware’s status in corporate law.

The state has been forward-thinking in introducing measures to attract blockchain companies, and the Decentralized Unincorporated Nonprofit Association Act is the latest addition to its crypto-friendly ecosystem.

DAOs, or decentralized autonomous organizations, are structures born out of the blockchain industry. Unlike traditional corporate entities, DAOs are governed by community members who vote on organizational management decisions using governance tokens.

While this structure has gained popularity, it has also presented legal challenges for both crypto enthusiasts and regulators alike.

To tackle the legal complexities surrounding DAOs, Wyoming’s legislation establishes an unincorporated nonprofit association model instead of treating them as traditional limited liability companies (LLCs). 

This framework grants DAOs legal recognition, the ability to contract with third parties, and the capacity to appear in court.

Moreover, it allows DAOs to pay taxes and offers limited liability for individual members against the actions of the organization.

Additionally, the Decentralized Unincorporated Nonprofit Association Act provides several advantages. It enables DAOs to operate within the existing tax framework, generating revenue for the government.

The law also aims to address the question of whether crypto tokens should be considered “securities,” as DAOs lack directors, officers, or a profit-maximizing mission. 

However, it remains to be seen how the Securities and Exchange Commission (SEC) will view this new structure, as the SEC has been actively seeking oversight over various crypto assets.

Regulatory Compliance

The report highlights that one of the biggest challenges Wyoming may face is convincing existing DAOs to adopt the new legal structure. Many DAOs allegedly embody the “rebellious spirit” of the crypto industry and may be reluctant to comply with the regulatory framework, the report notes.

However, venture capital firm a16z crypto, which supported the legislation, plans to work with portfolio companies to adopt the new structure and make it a prerequisite for future investments.

This cooperative approach aims to provide legal protection and compliance for businesses operating within the crypto industry.

Overall, Wyoming’s passage of the Decentralized Unincorporated Nonprofit Association Act signifies a significant step forward in recognizing and regulating DAOs. 

By addressing the legal challenges associated with these decentralized organizations, Wyoming aims to position itself as a leader in blockchain and crypto-friendly legislation.

The daily chart shows the total crypto market cap’s valuation trending upwards. Source: TOTAL on

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