DAOs are now legal in the US

DAO quality assurance procedures ensure that tax treatment differences are clear and DAO functionalities are updated.

The Utah State Legislature enacted House Bill 357, often known as the Utah Decentralized Autonomous Organizations Act (Utah DAO Act).

The Utah State Legislature enacted House Bill 357, often known as the Utah Decentralized Autonomous Organizations Act (Utah DAO Act).

This new legislation provides DAOs with legal status and limited liability, defining them as “Utah LLDs.”

The Digital Innovation Taskforce and the Utah Blockchain Legislative Body worked together to come up with the measure. 

After going through Senate and House committees, the Utah DAO Act was adopted on March 1, 2023.

The Bylaws specify the ownership of DAOs and safeguard DAO-compliant anonymity.

In addition, DAO quality assurance methods are implemented to guarantee that tax treatment distinctions are apparent and that DAO features are current.

Joni Pirovich, a blockchain and digital asset tax consultant with the Digital Innovation Taskforce, tweeted:

“This is a huge step for DAO innovation as the Act is based on the @coalaglobal DAO Model Law, and will become effective from January 2024.”

Recognizing that DAOs are global organizations, the DAO legislation tries to provide maximum freedom for innovation.

It can give technology assurances comparable to the safeguards sought by regulations mandating manual reporting procedures.

Many concerns were raised by the Utah Blockchain Legislature, and concessions were made to enact the legislation.

Concerns about the lack of accountability and anonymity of DAOs were eased by a compromise that required DAOs to name one of their founders while still keeping their anonymity.

In addition, the Utah Blockchain Legislature determined that the initial tax wording was incompatible with federal and state tax reality, thus the Utah Tax Commissioner’s office offered an alternative tax language.

Lastly, there was worry over the Utah Division of Companies’ lack of ramp-up time for handling additional applications.

To address this worry, the bill’s implementation date was pushed out to 2024, allowing more time for actual implementations to be adjusted and revised.

This year, the Republic of the Marshall Islands passed identical laws, recognizing DAOs as limited liability businesses and mandating the adoption of the official DAO structure throughout the state’s legal entities.