As fears of a crypto crackdown sweep across the United States, California is taking the initiative to provide a legal framework for Decentralized Autonomous Organizations (DAOs) with the introduction of Assembly Bill 1229. Led by San Francisco Assembly member Matt Haney, the bill has already received support from prominent crypto investment firm Andreessen Horowitz and the Crypto Council for Innovation.

If passed, Assembly Bill 1229 would change California’s corporate code to include DAOs, blockchain networks, and smart contract protocols. This would enable DAOs to incorporate in California, pay taxes, and provide better protection for Californians participating in the Web3 economy.

Unlocking the Potential of DAOs: Utah’s Blockchain Revolution

DAOs are organizations where control is distributed among its members and decisions are made through the use of blockchain, smart contracts, and governance tokens that enable participants to vote and decide on proposed actions. “Our goal is to educate our colleagues on blockchain basics, California corporations, and the workings of Decentralized Autonomous Organizations (DAOs),” a spokesperson for Assembly member Haney said. “By establishing a legal framework around DAOs, we can create certainty, legitimize this organizational type, and ensure appropriate taxation in California.”

The state of Utah recently passed The Utah Decentralized Autonomous Organizations Act (Utah DAO Act) providing limited liability to DAOs and recognizing them as “Utah LLDs.” Backed by the Digital Innovation Taskforce and the Utah Blockchain Legislature, the act ensures DAO-compliant anonymity through bylaws and introduces quality assurance DAO protocols.

EU Legislation: Protecting DAOs in Web3 World

This promising legal path for DAOs comes at a time when global regulators and officials have been paying attention to the rise of cryptocurrency.
European Union communications minister Timo Harakka suggested that the EU should consider new legislation to recognize and protect decentralized autonomous organizations (DAOs) during a panel at this year’s World Economic Forum, as currently DAOs are not sufficiently reflected in existing legislation.

Harakka told CoinDesk that “a lot of new players and actors in the Web3 world” are at stake and that “thinking on a multinational level” is needed to prevent having to alter thousands of laws and protect DAOs from the competition of different countries. He added that the European Commission is responsible for proposing new EU laws and that they are “eagerly looking forward to its work.”

Ensuring Safety and Certainty in the Web3 Economy

The introduction of Assembly Bill 1229 in California and The Utah Decentralized Autonomous Organizations Act (Utah DAO Act) in Utah are encouraging signs that US states are taking the initiative to create legal recognition for DAOs, and establish a legal framework in the Web3 economy. These smart corporate laws invite technology innovators to set up their business in these regions, and provide assurance to investors who are interested in the potential of DAOs and blockchain. Moreover, if the European Commission acts on Timo Harakka’s plea for legislation, we could have multinational regulations that ensure certainty and allow for global innovation in the DAO space.

The potential for legal structures to protect decentralized autonomous organizations (DAOs) is an exciting prospect for the Web3 economy. With proposals coming from California and Utah, and an encouraging plea from Timo Harakka in Europe, it is becoming clear that we are on the pathway to successful economic regulation that ensures safety and certainty in this futuristic venture.

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The post California’s Assembly Bill 1229: Legal Framework for DAOs in California appeared first on Boxmining.

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Filed under: Bitcoin - @ April 25, 2023 5:00 am