Wyoming Grants Legal Status to Decentralized Autonomous Organizations

Wyoming Grants Legal Status to Decentralized Autonomous Organizations

The state of Wyoming passed a law to grant legal status to DAOs. This law dictates that DAOs are able to establish make third-party contracts, open bank accounts, pay taxes, and offer liquidity to investors. Mark Gordon, the governor of Wyoming is the main signatory of the bill that added it to the legal framework.

This law will pave the way for formation and management of various DAOs. The Cointelegraph article further reported that the bill in question was backed by Select Committee on Blockchain, FinTech, and Digital Innovation Technology in the legislator. It will provide a legal definition for unincorporated, non-profit, and decentralized associations called DUNAs that are based within the state.

In this manner, DAOs will be able to exist as legal entities and register as DUNA. A DUNA will have the ability to make legal contracts with other firms. At the same time, this law will offer legal protection to investor in DAOs. Other legislative documents regarding DAOs do not have these metrics. This document was first approved on 7th March and outlined the legal requirements of a DUNA.

DAOs to Register as DUNA in Wyoming

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DAOs that are registered as DUNAs will have to define the workings of smart contracts. In the same manner, as a legally registered firm, DUNAs will provide a detailed outline of the legal obligations of its members and association. A DUNA is defined as a separate legal entity from its members which entails that DAOs are liable without implicating individual members of this organization.

One person associated with a DAO is not liable for breach of decentralized unincorporated non-profit association contract. This is applicable, if the breaching party is a member, authorized person, administrator, management contributor or participant in the DAO ecosystem.

DAO is an entity without any centralized operators or supervisors. It plays an important role in decision-making process in a bottom-up manner.

The community of DAO operates based on a set of rules that are coded within the blockchain infrastructure. DAOs operating as a legal entity may make third-party contracts, setup back accounts, pay taxes, and complete informational reporting obligations as per the law. Venture capital firm a16z issued an analysis report on the matter on 8th March. This report claims fundamental misunderstanding of non-profit designation of DAOs.

The Impact of DAO Legalization

A16z General Counsel, Miles Jennings recently noted that Wyoming-based DAOs are not exempted from participating in for-profit ventures. The report suggests that in accordance with Wyoming laws UNAs and DUNAs can undertake for-profit activities. This includes operating decentralized exchange protocol or decentralized social media platforms among other projects. At the same time, DAOs are allowed to remunerate contributing members.

This can include maintaining a payroll for governance contributors on the exchanges. The report further claims that Wyoming regulation may also compliment the Web3 ethos. At the same time, it will continue to maintain steady cash flows for investors.

The report concluded by noticing that this regulatory policy was an important breakthrough for DAO operators, issuers, and investors.

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MakerDAO Endgame Phase

MakerDAO, the project responsible for DAI stablecoin, has entered into the endgame phase. As part of its conclusion plans, the project is now planning to launch new tokens in the summer of 2024 to enhance investment interest and mass adoptions. On this account, the entity intends to launch two new tokens namely NewStable and NewGovToken.

The new launches are set to be accompanied by a series of structural reforms to enhance investment participation and capital inflows. The launch with commence with the introduction of a new brand, followed by token rollout, and new staking and yield farming features. Rune Christensen, the founder of MakerDAO has announced that changes on the forum will see Dai and MKR governance to remain unchanged.

However, the users can expect to get the additional option of upgrading to new token listings. The Endgame plan in question was approved by MakerDAO community in August 2022. It is designed to expand upon the organization-centric role of DAI to utility of NewStable for mass adoption.

At the same time, the project will also activate the Lockstake Engine (LSE) to expand governance mechanisms and crypto staking options.

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

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