Utah DAO Act: How the law was made and what it means for decentralized business

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How can Utah's new law effect the legal landscape for DAOs?

, granting legal recognition and limited liability protections to decentralized autonomous organizations in the state.

Lemke and Lee sat down with Cointelegraph to talk about how the law came into effect and what they think it means for the future of the crypto industry in Utah.So, what were the origins of the Utah DAO Act, and how did Lemke and Lee bring this legislation to life? Initially, the task force researched laws pertaining to DAOs from around the world and applied them to its first drafts of the Utah DAO Act. The task force started meeting regularly during the summer of 2022 to discuss and revise the bill internally.By early this year, the bill had been ready to take to lawmakers at the committee level. “The law was discussed within the task force as a whole and as a subcommittee, with multiple revisions and tweaks made along the way,” Lemke said.

According to Lee, one of the biggest challenges the task force faced was “educating lawmakers” about the underlying blockchain technology and how it enables DAOs to exist. He said that many lawmakers who had never dealt with blockchain technology before “felt uncomfortable” voting for or against it. “The Utah DAO Act provides a new legal entity type for DAOs, called the Limited Liability DAO . With this entity type, organizers and tokenholders of DAOs are not personally liable for the acts of the business, just like an LLC or a corporation,” Lemke said.

The Utah DAO Act is further expected to have an impact on the tax treatment of DAOs. For example, if an unregistered DAO pays U.S. programmers to write code, it should file payroll tax returns and probably apportion some of its revenues to the United States.

 

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