The Wyoming governor, Mark Gordon, recently signed into law a bill that establishes a legal framework for regulating decentralized autonomous organizations under existing financial laws. The enactment of this law is also viewed as an effort to attract blockchain firms to Wyoming.

New Law Reinforces Wyoming Crypto-Friendly Reputation

Mark Gordon, the Republican governor of Wyoming, recently signed a law recognizing decentralized autonomous organizations (DAOs). The law, known as the Decentralized Unincorporated Nonprofit Association Act (DUNA), reportedly establishes a framework for DAO regulation under existing financial laws.

The bill was advanced by the state’s Select Committee on Blockchain, co-chaired by State Sen. Chris Rothfuss. Rothfuss, a Democrat, praised the signing in remarks published by Fortune, saying it further solidifies Wyoming’s reputation as a crypto-friendly state. The enactment of the law is also viewed as an effort to attract blockchain firms to the state.

“This DUNA legislation is just the most recent puzzle piece. We wanted to make sure that we had the flexibility to figure out what the best practices and policies and use cases were in a legislature that was actually capable of being responsive and adaptive,” Rothfuss said.

According to a report by Fortune, Wyoming attempted to address the issue of DAO supervision by passing the DAO LLC Law in 2021. However, it was later observed that this law could create complications under U.S. securities law. The passage of the Corporate Transparency Act by the U.S. Congress further complicated Wyoming’s efforts to attract blockchain firms.

The Model of Unincorporated Nonprofit Associations

To circumvent such problems, the DUNA legislation reportedly adopts the model of unincorporated nonprofit associations. Miles Jennings, the general counsel for crypto at A16z, stated that under such a model, DAOs obtain legal existence, thus enabling them to contract with third parties or even appear in court.

While the new law reportedly avoids the question about the status of crypto tokens, Jennings did not rule out the possibility of the U.S. Securities and Exchange Commission (SEC) wanting to oversee DAOs.Turning his attention to the challenge that Wyoming now faces, Jennings said:

Some within the industry think that if you don’t subject yourself to the regulatory regime of a given jurisdiction that you’re somehow not subject to it. By doing that, you’re actually subjecting yourself to all jurisdictions.

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