Miles Jennings on Warpcast

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🚨Big News🚨Wyoming just enacted a game-changing law for web3. It creates a new entity for DAOs – the Decentralized Unincorporated Nonprofit Association (DUNA) – that’s been years in the making. @cowriellc and I provide everything you need to know below: https://a16zcrypto.com/posts/article/duna-for-daos/

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2/ Wyoming’s new law will enable blockchain projects to operate within the bounds of applicable laws without compromising their decentralization. It also keeps them permissionless. This is a major breakthrough.

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3/ Critically, the bill solves three key challenges DAOs face: 1️⃣ It gives them legal existence, enabling them to contract with third parties; 2️⃣ It enables them to pay taxes; and 3️⃣ It provides limited liability from the actions of other members.

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4/ The DUNA solves these challenges without exposing consumers to additional risks. Anyone building a consumer-facing application on top of a blockchain network, like a social media app, would continue to use traditional entity forms.

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5/ And even though it’s called a “nonprofit association,” the DUNA is able to both engage in profit making activities and pay reasonable compensation to DUNA members for any services provided to its ecosystem. This unlocks a huge design space for protocol economic models.

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6/ Further, the DUNA could help strengthen arguments that the digital assets of a project are not investment contracts (aka securities) under the Howey test. From @cowriellc's and my article:

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7/ This comes at a critical time. Regulatory and legal attacks are on the rise. Many allege that without a legal entity, a DAO is just a general partnership. That categorization would be catastrophic for DAO members, subjecting them to untenable tax and liability risk.

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8/ The DUNA provides a much needed oasis from that risk without overly restricting how DAOs are currently launched and operated – It: 🔹safeguards decentralization; 🔹empowers DAOs to grow; 🔹enables development of economic models; and 🔹keeps blockchain networks open.

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9/ The law goes into effect on July 1, 2024. Where appropriate, @a16zcrypto intends to support the adoption of the DUNA by DAOs and startups it’s associated with. This brings much needed certainty to web3 builders, enabling them to get back to doing what they do best: BUILD.

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