The most crypto-friendly state in the United States, Wyoming, passed DAO legislation on Wednesday. Dubbed Bill 38, this legislation will allow the state to recognize DAOs as limited liability companies (LLCs) as of July 7.
The state of Wyoming has been working on this bill for over a month. The legal status of DAOs being unclear has often been a source of controversy. Through Bill 38, Wyoming lawmakers circumscribe DAOs in the LLC (Limited Liability Corpotations) Act to grant them the legal status of limited liability companies.
Wyoming Senator Chris Rothfuss said: “Much of our work in Wyoming on blockchain and fintech governance has been focused on legal clarification where there is ambiguity before the court has to weigh decisively ”.
Lawmakers are aware of the fact that regulation alone would not succeed in securing DAOs. Technical limitations such as poorly designed or not updated smart contract systems also need to be addressed to move the industry forward.
Not far from us, In 2016, a hacker had hacked roughly $ 11.5 million DAO built under the Ethereum blockchain.
Reminder: What is a DAO?
DAO is an open source blockchain protocol that facilitates the creation of decentralized organizations from encoded rules. At the level of this protocol, we use smart contracts that automate the governance and decision-making of the organization. Of more importantly, they improve the consensus mechanism with a view to fostering greater participation by members of the organization.
All activities that take place at the blockchain level are public and accessible to members in real time. After the terrible hack of 2016, the industry was embroiled in an unprecedented crisis. The explosion of DeFi, DAOs are back in the spotlight.
Major changes at the DAO level with this new law
If before, there was no question of a manager for the organization on the DAO. Now organizations will be forced to present either a member of the organization as a manager or an algorithm that manages DAOs.
A decentralized autonomous organization driven by algorithms can only form if the underlying smart contracts can be updated, changed or improved in some other way.
Bill 38 looked at the confidential data of DAO members:
Members do not have the right under Law WS 17-29-410 to separately inspect or copy the records of a Decentralized Autonomous Organization and the organization has no obligation to provide information regarding its activities, financial situation or other circumstances to the extent that this information is available on an open blockchain. Source : Bill 38
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