Alabama Grants Legal Status to Decentralized Autonomous Organizations

Alabama has made history by becoming the second US state to grant legal status to decentralized autonomous organizations (DAOs). The state's governor, Kay Ivey, has signed the Decentralized Unincorporated Nonprofit Association Act into law, providing DAOs with legal recognition and limited liability protections. This move is seen as a significant step towards clarity on how DAOs exist and operate within the legal system.

The DUNA Act was introduced by Republican Senator Lance Bell in February and passed with an 82-7 vote, despite 16 abstentions. The law allows DAOs to operate within a defined legal framework, providing them with the ability to own property, enter into contracts, and sue or be sued. This is seen as a major breakthrough for the crypto industry, which has been calling for clearer regulations.

The bill also requires DAOs to have at least 100 members for a common nonprofit purpose, such as governing a blockchain network or smart contract system. These entities can operate through blockchain technology and smart contracts, with voting, proposals, and consensus mechanisms stored on-chain. The law aims to provide individual members with protection from personal liability in cases of disputes arising from DAO operations.