The United States Utah legislature has passed the DAO Act, which will take effect in 2024

It is reported that the Utah legislature of the United States passed the HB 357 Act on March 1, namely the Utah Decentralized Autonomous Organization Act (Utah DAO Act). As a result, Utah has become the first state to recognize decentralized autonomous organizations (DAO) through legislation. Utah DAO Act grants DAO: 1. legal recognition and limited liability protection, which solves the limitations of the previous method of “packaging DAO into LLC entities”; 2. Establish clear tax treatment; 3. There is no implied fiduciary responsibility to the DAO participants; 4. Use “rules” to protect the anonymity of DAO participants; 5. Incorporate technical control to ensure that the DAO is indeed a DAO.

Interpretation of this information:

The passage of HB 357, also known as the Utah Decentralized Autonomous Organization Act (Utah DAO Act), by the Utah legislature has made history by becoming the first US state to recognize decentralized autonomous organizations (DAO) through legislation. This act provides DAO with legal recognition and limited liability protection, thereby eliminating the limitations of the previous method of “packaging DAO into LLC entities.”

This new legislation also establishes clear tax treatment for DAOs, which means that DAOs will be subject to taxation just like other business entities operating within the state. Additionally, unlike other business entities, there is no implied fiduciary responsibility to the DAO participants. This means that participants in a DAO are not required to act in the best interest of other participants or the DAO itself.

Furthermore, the Utah DAO Act incorporates technical control to ensure that the DAO functions as a true DAO. There are rules established to protect the anonymity of DAO participants, allowing them to have an additional level of privacy, which is often a significant concern for many decentralized organizations.

By granting legal recognition and limited liability protection, the Utah DAO Act will likely encourage more entrepreneurs and investors to participate in the development and growth of DAOs. This legislation provides a clear regulatory framework for businesses that seek to incorporate via DAOs in the future.

The Utah DAO Act is a significant step forward for DAOs, as they continue to gain legitimacy and mainstream acceptance. This legislation is a positive signal for the industry, as it recognizes the potential of these organizations and sets the stage for future innovation and growth. As the digital economy continues to evolve, it is crucial that lawmakers keep pace with the changing landscape and provide a regulatory environment that fosters innovation while protecting consumers and investors. The Utah DAO Act is an excellent example of such a regulatory environment.