California legislators are considering a new bill that aims to provide legal clarity for Decentralized Autonomous Organizations (DAOs), potentially offering regulatory relief.
Proposed California Bill Seeks to Clarify Legal Status of Decentralized Organizations
California legislators are considering a new bill that aims to provide legal clarity for Decentralized Autonomous Organizations (DAOs), potentially offering regulatory relief. The bill, known as the "DAO Law," seeks to recognize DAOs as distinct legal entities, allowing them to enter contracts, own property, and operate within the state without the need for traditional business structures.
Proponents of the bill argue that it will help facilitate the growth and innovation of blockchain technology in California, while critics express concerns about the potential for fraud and abuse within these decentralized systems. If passed, the legislation could set a precedent for other states and countries to follow, reshaping the regulatory landscape for DAOs and the blockchain industry as a whole.
The bill defines a DAO as “an unincorporated organization that operates through deployment of code on a blockchain network and that uses smart contracts to govern its operations.” The bill also specifies the requirements and procedures for DAOs to register with the Secretary of State, to maintain records and reports, and to resolve disputes and liabilities. The bill also grants DAOs the right to sue and be sued in their own name, as well as the right to amend their governing code and smart contracts.