As decentralized autonomous organizations (DAOs) have exploded in popularity, a growing number of jurisdictions are seeking to be friendly to DAOs. Although it is possible for a DAO to function without a formal legal wrapper, DAOs may need legal personhood to contract with service providers, protect its treasury, or engage in certain activities. The novel attributes of DAOs, including their diffuse and everchanging memberships, lack congruence with traditional top-down frameworks for business entities.
Jurisdictions ranging from Wyoming to the Cayman Islands have adopted laws that endeavor to make room for the unusual nature of DAOs, with varying degrees of success. New York could enhance its status as one of the world’s leading financial, technological and cultural centers by becoming the global capital of DAOs. Although the state has not been a leader in attracting DAOs to incorporate or conduct activity within its borders, New York now has plenty of examples to study from if it desires to establish a welcoming environment for DAOs.