Utah state legislature passes DAO bill, to take effect in 2024

Binance News · 2023-03-06T09:46:10.000Z

The Utah Legislature passed HB 357, the Utah Decentralized Autonomous Organization Act (Utah DAO Act), on March 1. As a result, Utah has become the first country to pass legislation recognizing decentralization. States of Autonomous Organizations (DAOs). The Utah DAO Act grants DAOs: 1. Legal recognition and limited liability protection, addressing the limitations of the previous “wrap a DAO into an LLC entity” approach; 2. Establishing clear tax treatment; 3. No implicit implications for DAO participants fiduciary responsibilities; 4. Use "bylaws" to protect the anonymity of DAO participants; 5. Incorporate technical controls to ensure that the DAO is indeed a DAO. Yet there are concerns and compromises. The three main issues are: 1. The completely "irresponsible" anonymity of the DAO's foundation; 2. The (original) tax language being inconsistent with potential state and federal tax implications; 3. The lack of launch time to secure the Utah Department of Corporations Be prepared to process new applications. (Nation Law Review)

The Utah state legislature passed HB 357, the Utah Decentralized Autonomous Organization Act (Utah DAO Act), on March 1, making Utah the first state to pass legislation recognizing decentralized autonomous organizations (DAOs).
The Utah DAO Act granted DAOs: 1. Legal recognition and limited liability protection, addressing the limitations of the previous “wrap the DAO in an LLC entity” approach; 2. Established clear tax treatment; 3. No implied fiduciary duties to DAO participants; 4. Used “fine print” to protect the anonymity of DAO participants; 5. Incorporated technical gatekeepers to ensure that the DAO was indeed a DAO. However, there were some concerns and compromises. The three main issues were: 1. The completely “unaccountable” anonymity of the DAO foundation; 2. The (original) tax language was inconsistent with potential state and federal tax displays; 3. The lack of launch time to ensure that the Utah Department of Corporations was ready to process new applications. (Nation Law Review)