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Utah Legislatives Paves the Way for Decentralized Autonomous Organizations

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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…

Utah Legislatives Paves the Way for Decentralized Autonomous Organizations

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.

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

Interpretation of the news:


On March 1, Utah becomes the first state in the United States to pass legislation recognizing Decentralized Autonomous Organizations (DAO). The Utah Decentralized Autonomous Organization Act, also known as HB 357 Act, grants DAOs the right to legal recognition and limited liability protection. This announcement is significant as it solves the limitations of the previous method of “packaging DAO into LLC entities”.

The Utah DAO Act is a significant step forward for the recognition of decentralized organizations, as it establishes clear tax treatment for DAOs as well. This provides a much-needed move towards reducing legal uncertainties and making the regulations around DAOs more transparent. For the first time, this legislation offers DAOs a reliable business structure that will facilitate their growth and adoption.

Furthermore, the legislation removes the implied fiduciary responsibility of DAO participants. This new feature makes clear the difference between the responsibilities of the DAO and its participants, offering greater protection to those who are part of a DAO. Additionally, the rules establish anonymous participation in DAO’s operations, which would protect the privacy of the DAO members. This is essential in a decentralized and trustless environment, where privacy is paramount.

Finally, the Utah DAO Act ensures that DAO is indeed decentralized by incorporating technical control to authenticate its operations. This is a critical feature as it guarantees that DAOs adhere to their guiding principles and set rules of governance without manipulation by individuals.

In summary, the Utah Decentralized Autonomous Organization Act is a crucial landmark in ushering in the era of decentralized organizations in the United States. It offers significant advantages for DAO participants, with clear regulatory guidance, including limited liability protection, tax treatment, and anonymity. This breakthrough move demonstrates Utah’s commitment to creating a supportive environment for blockchain and cryptocurrency startups to foster innovation and growth.

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