The State of Utah recently passed novel legislation granting “decentralized autonomous organizations”—often referred to as “DAOs”—their own recognized form of legal existence and providing for limited liability. The Utah legislation responds to both the growing interest in DAOs for various kinds of smart contract-based applications, particularly in DeFi, see R. Schwinger, “DAOs Enter the Spotlight”, N.Y.L.J. (Mar. 21, 2022), and the recognized need for states to adopt new laws to accommodate this new form of organization. See generally Ravi Guru Singh, “New York Is Losing the Race To Be a Home for DAOs”, N.Y.L.J. (July 18, 2022).
This new kind of legal entity established under Utah law has a number of distinctive attributes, including some that are intended to help DAO members remain anonymous. But questions loom about how Utah’s hopes for DAO member anonymity will fare when they come up against recently adopted provisions under U.S. federal law that seek to promote transparency by forcing disclosure of the individuals who stand behind legal entities.