United States: Breaking It DAOn: What You Need To Know About Current DAO Laws

A pressing contemporary issue for DAOs is how they can retain their decentralized business structures, while obtaining benefits of legal recognition such as limited liability. DAOs are now looking to become more centralized. That is where the RMI [Republic of the Marshall Islands] and Wyoming legislation comes into play.

DAOs exist within a heavily regulated world. That causes issues, but also presents opportunities. … There are critical unresolved questions regarding the application of equitable principles, such as the law of fiduciary obligations, to DAO relationships. … Much current legislation equally applies to DAOs as it does for other entities. Securities legislation is the most obvious.

We are likely to see more jurisdictions make similar moves to the RMI and Wyoming. For tech-savvy jurisdictions like California and Texas, new legislation may provide another opportunity to retain the best in the tech-world. For other large economies, like New York, it presents an opportunity to attract DAOs to operate under the laws of their state, producing other economic benefits. A key question now is: Who is going to be the Delaware for DAOs?

Regardless of these developments, it remains critical for all involved with DAOs to be cognizant of the legal and practical issues relating to them, so they can truly unlock the financial and social opportunities provided by DAOs and protect themselves against the concomitant risks.