Decentralized Autonomous Organizations: To Statutorily Organize or Not?

Abstract

This Article explores the evolving concept of decentralized autonomous organizations (DAOs) in the context of Web3 technology. It raises critical questions about whether DAOs truly represent a step forward in limiting liability in entity governance structures or if they risk centralizing the decentralized. The text discusses the potential of DAOs to address regulatory and tax challenges while also highlighting concerns about their legitimacy and security. It compares the governance structures of traditional entities to DAOs and contemplates the reasons for formal organization pursuant to state statute. The Article further delves into some of the statutory laws in specific states recognizing and governing DAOs. Lastly, it suggests potential improvements in statutory frameworks to enhance legal predictability for DAO users and those seeking to ascribe liability.