DEFI

DAO Gospel? Ohio Legislation Recognizes DAOs as Legal Entities, a16z: Will be Considered as Future Investment Criteria

share
DAO Gospel? Ohio Legislation Recognizes DAOs as Legal Entities, a16z: Will be Considered as Future Investment Criteria

The state of Wyoming in the United States is establishing a new legal framework for DAOs. The venture capital firm Andreessen Horowitz (a16z) is very optimistic about this development and hopes that this structure will be adopted by many DAOs. It may be considered as one of the criteria for future investment projects by a16z.

Wyoming Legislation Makes DAO a Legal Entity

According to Fortune, Wyoming Governor Mark Gordon has signed the state's Decentralized Unincorporated Nonprofit Association Act, which further regulates the growing scale of DAOs in Wyoming.

DAOs can now operate as legal entities under the designation of unincorporated nonprofit associations, with the effective date set for July 1, 2024.

Note: The legislation is known as the Decentralized Unincorporated Nonprofit Association Act (DUNA).

a16z Crypto: Major Breakthrough, Voters No Longer Liable

Miles Jennings, General Counsel at a16z Crypto, pointed out that this legislation provides much-needed protection for DAOs, allowing them to remain open on blockchain networks.

It addresses three main issues:

  • Granting legality to DAOs

  • Imposing tax obligations on DAOs

  • Providing limited liability protection to members, shielding them from legal responsibility for actions of other members

Miles Jennings mentioned:

The purpose is not to create profits for DAOs. Although DAOs can generate income and distribute it to members, this structure does not shield them from regulatory enforcement in case of illegal activities. On the contrary, it allows DAOs to hire legal counsel and appear in court. This also means that voters in DAOs are not necessarily liable for the actions of the DAO, similar to how Enron shareholders were not held responsible for the company's fraud.

Biggest Challenge: Convincing DAOs to Adopt the New Structure

Miles Jennings stated that the current structure attempts to sidestep the thorny issue of whether cryptocurrencies should be classified as securities. He believes that DAOs, without directors, managers, or a mission to maximize profits, should not be classified as securities.

However, he also acknowledges that this structure may still attract attention from the SEC.

The biggest challenge, he points out, may be convincing existing DAOs to adopt the new structure:

a16z Crypto plans to collaborate with projects it has invested in and make the adoption of the new DAO structure a condition for future investments.

First Reader Meetup at Ramble Bar | All About the Cancun Upgrade:

The physical event "Ramble Bar Chat" invites Martinet and Anton, core organizers of ETHTaipei 2024, to chat with readers about the impact of the Cancun upgrade on the future of Ethereum and Layer2. Attendees also have the chance to win free tickets to ETHTaipei.

Readers are welcome to bring questions and join the offline gathering on Thursday, 3/14.

Registration link: https://abmd.pse.is/5nz688