Three U.S. states now recognize decentralized autonomous organizations as legal entities under the Decentralized Unincorporated Nonprofit Association (DUNA) framework. Alabama signed Senate Bill 277 on April 2, 2026. West Virginia enacted SB 670 on April 3, 2026. Wyoming, the originator, signed i...
"Decentralized governance is essential to crypto's future — it's one of the core constructs in market structure legislation." — Miles Jennings, General Counsel & Head of Policy, a16z Crypto
Three U.S. states now recognize decentralized autonomous organizations as legal entities under the Decentralized Unincorporated Nonprofit Association (DUNA) framework. Alabama signed Senate Bill 277 on April 2, 2026. West Virginia enacted SB 670 on April 3, 2026. Wyoming, the originator, signed its DUNA Act into law in March 2024, effective July 1, 2024. What Wyoming took 18 months to accomplish alone happened twice in two days.
The legislation addresses a structural legal gap that has exposed DAO participants to personal liability. In November 2024, a California federal court ruled in Samuels v. Lido DAO that DAOs can be classified as general partnerships, meaning token holders — including institutional investors Paradigm, Andreessen Horowitz, and Dragonfly — face potential personal liability for organizational actions. The CFTC's 2023 default judgment against Ooki DAO, which imposed $634,542 in penalties, established that DAOs are "persons" under the Commodity Exchange Act. The DUNA framework is a direct response to these rulings. It provides limited liability, legal personhood, and a governance structure compatible with blockchain-based decision-making — without requiring DAOs to abandon decentralization.
The stakes are material. According to DeepDAO and CoinLaw data, over 13,000 DAOs collectively manage approximately $24.5 billion to $28 billion in treasury assets globally. Governance token holders exceed 6.5 million active addresses. Average voter participation sits at roughly 17% of token holders. These organizations operate across protocol governance, investment collectives, social communities, and philanthropic initiatives — all without a uniform legal framework in the United States until the DUNA model emerged.
DAOs have operated in a legal vacuum since their emergence. Without a recognized legal entity type, U.S. courts have defaulted to classifying them as general partnerships — a designation that carries unlimited personal liability for every member.
Two cases crystallized the risk:
Ooki DAO (2023). The CFTC sued Ooki DAO for operating unlawful off-exchange leveraged commodity transactions, failing to register as a futures commission merchant, and lacking AML/KYC procedures. The Northern District of California granted a default judgment, ruling that the DAO constituted a "person" under the Commodity Exchange Act. The court imposed $634,542 in civil penalties and permanently enjoined the DAO's operations. The precedent: DAOs can be sued, held liable, and shut down by federal regulators.
Lido DAO (2024). In Samuels v. Lido DAO, U.S. District Judge Vince Chhabria ruled on November 18, 2024, that Lido DAO constitutes a general partnership. The plaintiff alleged that LDO governance tokens are unregistered securities. The court identified Paradigm Operations, Andreessen Horowitz, and Dragonfly Digital Management as potential general partners based on their active governance participation. Miles Jennings of a16z stated the ruling "dealt a huge blow to decentralized governance," warning that "any DAO participation (even posting in a forum) could be sufficient to hold DAO members liable." Discovery is ongoing; a hearing on dispositive motions is scheduled for November 2026.
These rulings created a chilling effect. DAOs faced two options: adopt a traditional corporate wrapper (LLC, foundation) and sacrifice decentralization, or remain unwrapped and expose members to unlimited liability. The DUNA offers a third path.
The DUNA draws from existing Uniform Unincorporated Nonprofit Association Acts (UUNAA) — well-established law in most U.S. states — and adapts them for blockchain-native organizations. The key structural elements:
Legal personhood. A DUNA is a recognized legal entity. It can own property, enter contracts, open bank accounts, hire employees, sue, and be sued — in its own name, not through its members.
Limited liability. Individual members, administrators, and governance participants are shielded from personal liability for organizational obligations and other members' actions. This directly addresses the general partnership classification risk from Lido DAO.
Minimum membership. A DUNA must have at least 100 members joined for a common nonprofit purpose. This threshold is designed to reflect the decentralized nature of blockchain governance rather than small-team startups.
Nonprofit restriction. DUNAs may not distribute profits to members. Revenue generation is permitted only if profits are used to further the organization's nonprofit purpose — such as maintaining a protocol, funding development, or supporting ecosystem growth.
On-chain governance. Governance can operate entirely through blockchain technology and smart contracts. Voting, proposals, and consensus mechanisms can be recorded and executed on-chain.
Tax flexibility. DUNAs can elect corporate taxation under Subchapter C or pursue nonprofit tax exemption, allowing projects to match their legal structure to their operational model.
Wyoming signed its DUNA Act into law in March 2024, effective July 1, 2024. The bill was sponsored by the state legislature's Select Committee on Blockchain, Financial Technology and Digital Innovation Technology. Wyoming had previously pioneered DAO LLC legislation in 2021, but the DAO LLC structure was criticized for requiring a managing member and not adequately reflecting decentralized governance. The DUNA replaced the LLC approach with a nonprofit association model designed specifically for protocol governance.
Key provisions: 100-member minimum; nonprofit purpose requirement; on-chain governance permitted; limited liability for members; tax election flexibility.
Alabama Governor Kay Ivey signed Senate Bill 277 on April 2, 2026. The bill was introduced in February 2026 by Republican Senator Lance Bell and passed the Alabama House 82-7 with 16 abstentions on March 17, 2026.
Alabama's version mirrors Wyoming's core architecture: 100-member minimum, nonprofit purpose, limited liability, on-chain governance compatibility. The law takes full effect on October 1, 2026.
One distinction: Alabama's legislation followed the model legislation published by a16z Crypto, which drafted the Model Decentralized Unincorporated Nonprofit Association Act in March 2024 explicitly to facilitate multi-state adoption.
West Virginia enacted SB 670 on April 3, 2026 — one day after Alabama. The state explicitly framed its DUNA legislation as an economic development tool, positioning itself to "attract crypto innovation to the state by creating a legal framework for DAOs." The legislation mirrors the same core DUNA architecture: legal entity status, limited liability, minimum membership requirements, and on-chain governance.
West Virginia's rapid adoption suggests a competitive dynamic among states seeking to attract blockchain organizations — a pattern reminiscent of Delaware's historic dominance in corporate incorporation.
| Feature | Wyoming | Alabama | West Virginia | |---|---|---|---| | Signed into law | March 2024 | April 2, 2026 | April 3, 2026 | | Effective date | July 1, 2024 | October 1, 2026 | 2026 | | Minimum members | 100 | 100 | 100 | | Limited liability | Yes | Yes | Yes | | Nonprofit required | Yes | Yes | Yes | | On-chain governance | Yes | Yes | Yes | | Tax election | Corporate or exempt | Corporate or exempt | Corporate or exempt | | House vote | Committee-sponsored | 82-7 | Enacted |
What it solves:
Liability shield. Members no longer face default classification as general partners. The DUNA's limited liability protection directly neutralizes the threat created by the Lido DAO and Ooki DAO rulings.
Legal personhood. DAOs can contract with service providers, lease office space, hold bank accounts, and participate in legal proceedings without requiring individual members to act as counterparties.
Regulatory interface. The DUNA provides a recognized entity type that regulators can interact with — a critical feature as federal agencies including the SEC, CFTC, and FinCEN increase oversight of DeFi governance structures.
Tax compliance. The entity structure allows DAOs to comply with federal and state tax obligations, resolving an ambiguity that has persisted since DAOs first emerged.
What it does not solve:
Securities classification. The DUNA does not address whether governance tokens are securities. The Lido DAO case centers on whether LDO tokens constitute unregistered securities — a question the DUNA framework does not answer. SEC jurisdiction remains unresolved.
Federal preemption. State-level DUNA laws do not override federal regulatory authority. The CFTC, SEC, and FinCEN can still bring enforcement actions against DUNAs and their members for violations of federal law.
Profit distribution. The nonprofit restriction limits the DUNA's utility for DAOs that function as for-profit enterprises or seek to distribute revenue to token holders. Protocols with fee-sharing mechanisms may find the DUNA structure incompatible with their economic model.
Cross-border recognition. DUNA status is recognized only in the enacting state. There is no federal DUNA law, no mutual recognition agreement between states, and no international recognition framework. A Wyoming DUNA operating in New York or the EU has no guaranteed legal status in those jurisdictions.
The DUNA competes with several offshore structures used by DAOs:
Marshall Islands DAO LLC. Enacted in 2022, the Marshall Islands DAO Act recognizes DAOs as LLCs. Setup takes approximately three weeks and requires only three founding members. No directors or managers are required — a structural advantage for decentralization. However, the Marshall Islands' small professional services sector limits ongoing legal and accounting support.
Cayman Islands Foundation. A common choice for DAOs seeking a familiar common-law jurisdiction. Cayman foundations require a council (board) and a supervisor, introducing centralization elements that may conflict with DAO governance principles.
Swiss Foundation. Used by several prominent protocols (Ethereum Foundation, Cardano Foundation). Swiss foundations provide strong legal protection but require a board of directors and are subject to Swiss supervisory authority oversight.
Panama Foundation. Offers tax-neutral status and minimal reporting requirements but lacks specific DAO-focused legislation.
The DUNA's primary competitive advantage over these offshore alternatives: it provides U.S.-domiciled legal entity status without requiring directors, managers, or a board — preserving decentralization while enabling compliance with U.S. law.
a16z Crypto has been the DUNA framework's most prominent institutional advocate. The firm published the Model Decentralized Unincorporated Nonprofit Association Act in March 2024, drafted to facilitate adoption across multiple states. According to a16z, the firm intends to "direct the DAOs it's associated with toward this legal status" and will "limit its future DAO investments toward entities pursuing this legal path."
Miles Jennings stated that the Alabama enactment gives communities "the certainty to build, govern, contract, and scale in the real world" while "embracing innovation and protecting participants."
The institutional calculus is straightforward: the Lido DAO ruling exposed a16z, Paradigm, and Dragonfly to potential personal liability as general partners of an unincorporated association. The DUNA eliminates that exposure. For institutional investors with significant DAO governance positions, adoption of the DUNA framework is a risk management measure as much as it is a governance preference.
The DeFi Education Fund noted the DUNA's passage alongside the broader regulatory environment, including the advancement of state-level legislation like Alabama's separate adoption of the Decentralized Unincorporated Nonprofit Association (DUNA) Act as a significant development for the DeFi governance stack.
Three U.S. states — Wyoming, Alabama, and West Virginia — have enacted DUNA legislation, creating a legal entity type purpose-built for DAOs. Alabama and West Virginia both signed within 24 hours of each other on April 2-3, 2026.
The DUNA provides legal personhood, limited liability, and on-chain governance compatibility without requiring directors, managers, or profit distribution — preserving decentralization.
Over 13,000 DAOs manage $24.5 billion to $28 billion in treasury assets globally. The DUNA offers a domestication path for organizations previously forced to choose between offshore wrappers and legal exposure.
The framework directly addresses the liability risks established by the Ooki DAO default judgment ($634,542 in penalties, 2023) and the Lido DAO general partnership ruling (November 2024), which exposed a16z, Paradigm, and Dragonfly to personal liability.
The nonprofit restriction limits DUNA applicability. DAOs with fee-sharing or profit-distribution mechanisms may find the structure incompatible. Securities classification of governance tokens remains an open federal question.
A competitive dynamic among U.S. states is forming, with West Virginia explicitly framing its DUNA adoption as economic development strategy to attract blockchain organizations — echoing Delaware's historic corporate incorporation model.
The DUNA framework represents a structural adjustment to U.S. law, not a policy shift. It applies existing unincorporated nonprofit association law — present in most states for decades — to blockchain governance structures. The speed of multi-state adoption (two states in two days) reflects both the severity of the legal exposure DAOs face after the Ooki and Lido rulings and the availability of a model act drafted for rapid legislative adoption.
The framework's limitations are significant. It does not resolve securities classification, does not bind federal regulators, does not enable profit distribution, and lacks cross-border recognition. For many DAOs — particularly those with revenue-sharing models — the DUNA may be structurally incompatible.
For the subset of DAOs that operate as nonprofit governance structures for open-source protocols, the DUNA fills a measurable gap. The question is whether three states are sufficient to establish the DUNA as an industry standard, or whether federal legislation — potentially through the market structure bills currently under congressional debate — will supersede the state-by-state approach.
The data suggests the former is more likely in the near term. a16z's stated intention to direct portfolio DAOs toward DUNA status, combined with the liability exposure facing institutional governance participants, creates strong private-sector adoption incentives independent of further legislative action.
Alabama Governor Signs Bill Creating Legal Framework for DAO-Like Nonprofit Entities — The Block, April 2, 2026. Coverage of Alabama SB 277 signing.
How Alabama and West Virginia Gave DAOs a Much Needed Win — DL News, April 2026. Analysis of both states' DUNA enactments.
Alabama and West Virginia Adopt DUNA Framework — TechBuzz, April 2026. State-by-state comparison of DUNA provisions.
The DUNA: An Oasis for DAOs — a16z Crypto. Analysis of the DUNA framework and model legislation.
Why the DUNA Matters — a16z Crypto. Institutional rationale for DUNA adoption.
Wyoming Grants DAOs New Legal Structure — CoinDesk, March 8, 2024. Coverage of Wyoming's original DUNA enactment.
California Court Rules Lido DAO Members Can Be Held Liable Under Partnership Laws — Decrypt, November 2024. Coverage of the Samuels v. Lido DAO ruling.
CFTC Wins Ooki DAO Case, Setting Precedent That DAOs Can Be Held Liable — The Block, June 2023. Coverage of the CFTC default judgment.
DeFi Debrief: Week of April 6, 2026 — DeFi Education Fund. Weekly regulatory and policy summary.
DAO Treasury Holdings Statistics 2025: Decentralized Wealth — CoinLaw. Treasury data across DAO ecosystem.
Marshall Islands DAO LLC as a DAO Legal Wrapper — LegalNodes. Comparison of offshore DAO legal structures.
West Virginia SB670 — 2026 Regular Session — LegiScan. Official bill tracking for West Virginia's DUNA legislation.