Mark Gordon, governor of the state of Wyoming, signed the DUNA bill into law on March 7, which recognizes the legal existence of decentralized autonomous organizations (DAOs) within the state.
The Wyoming Decentralized Unincorporated Nonprofit Organization Association Act, also known as DUNA, is a historic bill for the cryptocurrency industry, which recognizes the legal existence of DAOs within the jurisdiction.
This bill, which will come into force from June 1, 2024, will allow these types of decentralized autonomous organizations to access different financial services within the state of Wyoming, in addition to being able to establish contracts with third parties, among other benefits.
Wyoming Governor Mark Gordon promulgated the bill last week, an act that recognizes and certifies the existence of DAOs and grants legal status to these organizations within the state.
Wyoming, a friendly state for DAOs and cryptocurrencies
Wyoming has taken another bold step on its path to establish itself as a state friendly to the development and growth of the crypto industry. This state, represented by Senator Cynthia Lummis in the United States Senate, was the first in the country to pass regulation related to DAOs. In 2021, Wyoming approved a bill that would recognize decentralized autonomous organizations as a type of limited liability company (LLC), allowing these organizations to enter into contracts, manage their treasury, and pay taxes, among other things.
Now, the new DUNA bill signed into law by the governor provides legal existence and extends the boundaries for these organizations within Wyoming, without compromising decentralization.
A law that ensures the construction of Web3
General Counsel and head of decentralization at A16z Crypto, Miles Jennings, highlighted in his X account that Wyoming's DUNA law “changes the rules of the game for Web3.”
In addition to allowing conclusion of contracts with third parties and payment of taxes, Jenning explained that the DUNA law provides “limited liability for the actions of other members” of the DAO, which enables participation in lucrative activities and payment of compensation to the members of the decentralized organization for any service they provide within the organization. “This opens up huge design space for protocol economic models,” Jennings said.
Regarding the terminology and classification of digital assets, Jennings also commented that the new law for DAOs in Wyoming establishes a precedent that “could help reinforce arguments that a project's digital assets are not investment contracts”; that is, they are not values according to the Howey test.
For all of the above, Jennings emphasized the importance of the DUNA law to provide clarity to blockchain and Web3 developers. He indicated that this bill provides a much-needed oasis to “safeguard decentralization; empower DAOs to grow; allow the development of economic models and keep blockchain networks open.” Specifically, Jennings believes that the DUNA law solves all the key challenges facing the blockchain ecosystem and DAOs today, so it will help build an Internet that returns to its foundations as an open network, preventing power from being concentrated in hands of a few companies, as is currently the case with Web2.
“A DUNA can be used for decentralized governance of open blockchain networks, but anyone building a consumer-facing application, such as a social media app, a car service, or a music streaming app on top of these open networks, would continue using traditional entity forms, such as the corporation or LLC,” Jennings highlighted in a publication.
Wyoming's DUNA Law comes at a crucial time for the cryptocurrency industry, which has become the center of attention of regulators, both in the country and globally.
On the other hand, in addition to its favorable legislation with DAOs, Wyoming also recognizes cryptocurrencies as a form of money, which has helped it become an attractive haven for companies that are part of the crypto industry.
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