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DAO’s could soon get legal standing under new California law



DAO’s are a “newish” form of decentralised or “headless” organisation and California wants to profit and benefit from them so is introducing new legislation to approve and regulate them.


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A legal framework for Decentralized Autonomous Organizations (DAOs), a relatively new form of decentralised – or headless – company that runs on Web 3.0 technology, could finally be coming to California after San Francisco Assembly member Matt Haney introduced Assembly Bill 1229 on Monday, which already has support from prominent crypto investment firm Andreessen Horowitz and the Crypto Council for Innovation.


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“We have long been supportive of reasonable regulation that puts guardrails in place while giving innovators the certainty they need to keep building, which is exactly what this legislation does,” Miles Jennings, General Counsel at a16z crypto, told reporterst. Jennings expressed his enthusiasm for California leading the way in this area, as the state has long been a high-tech leader.


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Assembly Bill 1229 would change the state’s corporate code to include DAOs, blockchain networks, and smart contract protocols. If passed, the bill would enable DAOs to incorporate in California and pay taxes, while providing better protection for Californians participating in the Web 3.0 economy.

“We have to make sure that our laws are keeping up with technology,” said a spokesperson for Assembly member Haney. “For us, we’ve seen only three paths forward, environmental tech, biotech, and we think that Web 3.0 needs to be firmly rooted in California. And that’s what this bill is about.”


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A DAO, such as Jack Dorsey’s BlueSky social network for example, is an organizational structure where control is distributed among its members using smart contracts on a blockchain, and participants use governance tokens to vote on proposed actions, allowing for a decentralized decision-making process.

Bringing Haney’s fellow assembly up to speed is the first step to addressing the complex topic of DAOs, and blockchain technology.

“Our goal is to educate our colleagues on blockchain basics, California corporations, and the workings of Decentralized Autonomous Organizations (DAOs),” the spokesperson said. “By establishing a legal framework around DAOs, we can create certainty, legitimize this organizational type, and ensure appropriate taxation in California.”

The bill comes at a crucial time, as government regulators and officials around the world have set their sights on cryptocurrency. A crypto crackdown in the US was triggered by the collapse of FTX in November, led by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). State regulators have also stepped up their scrutiny of crypto projects.


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“Whatever you call this new technology – blockchain, Web 3.0, or crypto – we know that it’s the future of tech,” Haney said in a statement. “It would be devastating to both our economy and our identity as a state to lose California’s place as the world’s tech leader because our laws are not keeping up with the times.”

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