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Overview
Scope of the chapter. This chapter examines the statutes that allow a decentralized autonomous organization to take the form of a limited liability company or of another entity with legal personality. It treats in detail the Wyoming Decentralized Autonomous Organization Supplement, Wyo. Stat. Ann. §§ 17-31-101 to -116, as enacted in 2021 and amended in 2022, and the Marshall Islands Decentralized Autonomous Organization Act 2022, 52 MIRC ch. 7, as amended in 2023. It then describes the Utah Decentralized Autonomous Organization Act, now codified at Utah Code Ann. §§ 16-22-101 to -406, Vermont's blockchain-based limited liability company, the Tennessee statute and Wyoming's decentralized unincorporated nonprofit association. It closes with the choice among these forms, the tax and banking questions that follow formation, a model statement of management and a checklist.
The problem the statutes address. An organization that governs itself through tokens and smart contracts, with no charter filed in any registry, is in most American jurisdictions an unincorporated association whose participants may be partners. The consequences for token holders who vote, and for investors who hold governance tokens, are examined in ch. 19. A statute that lets the same organization file articles, obtain limited liability for its members and appoint a registered agent addresses those consequences. It also gives the organization a counterparty identity for contracts, bank accounts and tax filings, and a defined set of members against whom rights and duties run.
What the statutes do and do not do. Each statute layers rules for decentralized governance over a host entity law. In Wyoming and the Marshall Islands the host is the jurisdiction's limited liability company act, which applies except where the DAO statute is inconsistent with it. Wyo. Stat. Ann. § 17-31-103(a); 52 MIRC § 703(1)(a). Utah created a separate entity whose by-laws rank below the DAO statute and above the Utah Revised Uniform Limited Liability Company Act. Utah Code Ann. § 16-22-102. None of the statutes exempts a DAO from securities, commodities, sanctions or tax law. Vermont's statute says so expressly. Vt. Stat. Ann. tit. 11, § 4176. The Marshall Islands statute contains limited carve-outs from its own securities law, discussed at ¶ 2070.05, which have no effect on the law of any other country.
The central Wyoming questions. Three questions recur in Wyoming practice and receive the most attention here. The first is what the articles must say about management after the 2022 amendments, which replaced the choice between member management and algorithmic management with a requirement that the articles state how the members manage the organization and to what extent that management is conducted algorithmically. § 17-31-104(e). The second is the relationship between the code and the articles: every smart contract must be capable of being upgraded, § 17-31-109, and the articles must be amended whenever the smart contracts are updated or changed, § 17-31-107(a)(iii). The third is the requirement that the organization remain under the control of at least one natural person, failing which it is dissolved. § 17-31-114(a)(v).
Relationship to other chapters. The technology of upgradeable contracts and administrative keys is described in ch. 2 (see supra ¶¶ 260.06, 260.09). The unincorporated DAO and the partnership cases are examined in ch. 19. Foundations and purpose trusts, which serve many protocol treasuries, are treated in ch. 18. Holding digital assets through an ordinary limited liability company is treated in ch. 17, and the securities status of governance tokens in ch. 35. The fuller treatment of the Wyoming statute as a matter of limited liability company law appears in Lighthouse on Limited Liability Companies, ch. 53, and its Appendix C contains a model operating agreement for a Wyoming DAO LLC.
Sources and currency. The Wyoming text is stated from the official compilation, which shows chapter 31 unamended since 2022 Wyo. Sess. Laws ch. 36. The Marshall Islands text is stated from the consolidated chapter published by the Nitijela, which incorporates the amendments made by P.L. 2023-83. The Utah text is stated from the official code as renumbered and amended by 2026 Utah Laws ch. 92, effective October 1, 2026. The Tennessee statute is described from secondary sources, and the text says so where it relies on them.
Terminology. In this chapter, "DAO" refers to the organization as a matter of fact: a group whose governance is conducted in whole or in part through tokens and smart contracts. "DAO LLC" refers to a limited liability company organized under a DAO statute. The Wyoming statute uses "decentralized autonomous organization" to mean the company itself, § 17-31-102(a)(ii), and the Marshall Islands statute uses it to mean a resident domestic limited liability company organized under its chapter, 52 MIRC § 702(c). "Articles" refers to Wyoming's articles of organization and "certificate" to the Marshall Islands certificate of formation. "Code" refers to the smart contracts the organization uses.
Organization of the chapter. Paragraphs 2010 to 2060 treat Wyoming section by section, beginning with the history of the 2021 enactment and the 2022 amendments. Paragraph 2070 treats the Marshall Islands. Paragraph 2080 treats Utah, Vermont, Tennessee and Wyoming's nonprofit association statute, then the choice among wrappers and the tax and banking questions. Paragraph 2090 contains the drafting guidance, a model statement of management and a checklist.