Concept
A DAO is a decentralized autonomous organization governed by token holders according to rules encoded in smart contracts. Legally, it has long been a "nobody": without recognized status, a DAO could not enter into contracts, open accounts, pay taxes, or shield participants from personal liability. Wyoming was the first U.S. state to attempt to close this gap, offering DAOs two distinct legal wrappers.
DAO LLC (2021)
In 2021, Wyoming adopted an amendment to its LLC statute allowing DAOs to register as a special type of limited liability company—the DAO LLC (2022 amendments clarified details). Such a company receives the familiar limited liability of an LLC, and its charter may directly reference a smart contract as the source of governance rules. This made the state a pioneer in DAO regulation, though the construct has its critics: wrapping a truly distributed network into a single LLC does not always work.
DUNA (2024)
On March 7, 2024, the governor signed SF50—the Decentralized Unincorporated Nonprofit Association Act—which took effect on July 1, 2024. DUNA grants DAOs the status of a decentralized unincorporated nonprofit association. To qualify, an organization must have at least 100 members united by a common nonprofit purpose. At the same time, a DUNA may engage in revenue-generating activities—provided all profits are directed toward achieving that purpose.
⚙️ DUNA solves three practical challenges for DAOs: it provides legal existence, enabling the DAO to enter contracts and appear in court; it allows the DAO to pay taxes and own property and tokens; and it shields members from liability for the actions of other members—all without destroying decentralization itself.
What to Choose and Where the Limits Are
🔗 Related
US LLC for non-residents · Crypto-friendly jurisdictions · Crypto for private wealth · Asset tokenization (RWA) · Holding structures · Offshore companies
DAO LLC is closer to commercial projects with a defined circle of participants; DUNA is designed for large nonprofit networks—protocols and public blockchains with hundreds of token holders. Both wrappers remain instruments of Wyoming state law, and their recognition outside the state is not guaranteed; questions of federal taxation, securities regulation, and cross-border recognition remain open. For private capital entering crypto, this is a way to give DAO participation a legal form, but the structure should be vetted for the specific jurisdiction and tax profile of the owner.
🍓 Wyoming has given DAOs two legal frameworks: DAO LLC since 2021 and the nonprofit DUNA since July 2024. Both address fundamental problems—liability, contracts, taxes, asset ownership—but this is the law of one state, and it does not resolve federal or cross-border issues.
This material is analytical in nature and does not constitute individual legal or tax advice.
Key factual claims
- In 2021, Wyoming adopted an amendment to its LLC statute allowing DAOs to register as a special type of limited liability company—the DAO LLC (2022 amendments clarified details).
- On March 7, 2024, the governor signed SF50—the Decentralized Unincorporated Nonprofit Association Act—which took effect on July 1, 2024.
- Related links: US LLC for non-residents · Crypto-friendly jurisdictions · Crypto for private wealth · Asset tokenization (RWA) · Holding structures · Offshore companies · Wyoming Legislature — SF0050 (2024) ↗