Wyoming’s DAO-focused “Bill 38” has been approved by the senate at today’s Senate Corporations, Elections and Political Subdivisions Meeting, bringing it one step closer to reality.
The news was broken to the Twitter cryptocurrency community by Cardozo Law professor Aaron Wright, who detailed the implications of the milestone:
🚨 DAOs took a HUGE step forward today 🚨
The Wyoming DAO bill passed the Wyoming Senate committee. I’ll try to keep folks posted on what happens next.
This bill is significant — short thread why 👇 https://t.co/RLrRUNAL2A
— Aaron Wright (@awrigh01) March 9, 2021
Bill 38 in centered on giving decentralized autonomous organizations (DAOs) the ability to gain legal company status in the state of Wyoming, enabling DAOs to legally function within the real world.
What is a DAO?
DAO stands for “decentralized autonomous organization”, a business structure which operates without the need for a central entity. Instead, DAOs most often use a smart-contract with hard-coded rules to guide their governing processes, which function by using voting rights instilled in specialized cryptocurrency tokens.
In most cases, actions can only be executed by a DAO and its funds when a proposal is submitted and approved by token holders, via a strict on-chain voting process.
Bill 38 and its implications for DAOs
Bill 38 was originally submitted in January of this year and sent to the Wyoming Senate’s Joint Corporations, Elections & Political Subdivisions Committee in early February.
The bill would enable DAOs would to legally register themselves as limited liability companies (LLCs), connecting the blockchain-centric business structure to the legal world. Such DAOs would then be recognized by local state authorities and more easily engage in contracts and legal agreements that are legitimate and enforceable in the eyes of state law. This could involve off-chain employment, investment and more, at last bridging the gap between blockchain and traditional systems.
According to Professor Wright in his Tweet-storm, Wyoming will also be building a registration API, which would drastically streamline the process for setting up legally-recognized DAOs.
Although the bill still has a long way to go before actually being enacted, today’s approval marks a huge leap forward for the concept of DAOs and their possible applications in the future.
Alejandro is a New Zealand-based trader and writer who has been involved in the cryptocurrency and blockchain space since early 2016. Being extremely passionate about this emerging technology, he has written content for a myriad of projects and news outlets.