Alabama grants full legal status to DAOs transforming decentralized governance in the United States

Alabama has officially become the second U.S. state to give decentralized autonomous organizations (DAOs) legal standing, following Wyoming’s lead.

This milestone comes with the signing of the Decentralized Unincorporated Nonprofit Association (DUNA) Act, also known as Senate Bill 277, by Governor Kay Ivey.

The legislation passed the House with overwhelming support—82 votes in favor, 7 against, and 16 abstentions—after being introduced earlier this year by Republican Senator Lance Bell.

What the DUNA Act Means for DAOs

The new law grants DAOs full legal entity status, providing clarity that has long eluded decentralized projects.

According to Miles Jennings, head of policy and general counsel at a16z Crypto, “decentralized governance is essential to crypto’s future” and now these organizations can operate with confidence in the real world.

Under the law, DAOs can own property, enter contracts, and sue or be sued.

Individual members and administrators gain protection from personal liability, making it safer to participate in decentralized governance without risking personal assets.

Requirements for Legal DAOs

To qualify, a DAO must have at least 100 members who share a nonprofit purpose—examples include governing a blockchain network, maintaining a smart contract system, or running a community treasury.

Governance can be conducted entirely on-chain, with proposals, voting, and consensus mechanisms executed via blockchain technology and smart contracts.

This framework allows DAOs to scale, collaborate, and interact with the broader economy while operating transparently and securely.

Suggested Readings (News continues below)

Nishad Singh agrees to pay 3.7 million settlement with CFTC over FTX collapse in United States

Israeli forces strike IRGC ground base and missile storage site deep inside Tehran and Tabriz sending shockwaves across Iran

Schumer Labels Donald Trumps Iran Policy as Historic Blunder in United States

Donald Trump tells United Kingdom to take control of Strait of Hormuz amid rising Middle East tensions

A Growing Trend Across the U.S.

Alabama isn’t the only state embracing DAOs. Wyoming led the way in 2021 and recently updated its DUNA Act in March 2024.

Meanwhile, West Virginia is moving toward approval of its own version (HB 5060), with the House already passing the bill and the governor’s signature pending.

The recognition of DAOs in multiple states signals a shift toward mainstream adoption and formal regulatory acknowledgment of decentralized governance.

Global DAO Landscape

DAOs are not just a U.S. phenomenon. Over 13,000 DAOs exist worldwide, collectively controlling more than $24.5 billion in treasury assets as of 2025, according to CoinLaw.

Ethereum and its layer-2 networks host over 85% of these organizations, and the average treasury size sits around $1.2 million.

This legal recognition in states like Alabama provides a pathway for these organizations to operate more securely and attract further investment.

Impact and Consequences

By granting DAOs legal status, Alabama is offering decentralized projects the legitimacy needed to grow without fear of legal ambiguity.

This could accelerate adoption, attract institutional participants, and foster innovation in blockchain governance.

At the same time, it sets a precedent for other U.S. states to follow, potentially shaping the future regulatory landscape for crypto.

What’s Next

The next focus will likely be West Virginia’s pending DUNA Act and broader federal legislation on crypto market structures.

If more states adopt similar laws, DAOs could become fully integrated into mainstream financial and organizational ecosystems, paving the way for new forms of collaborative governance and investment.

Summary

Alabama has officially recognized DAOs as legal entities under the DUNA Act, following Wyoming.

The law allows decentralized organizations to operate, own assets, and enter contracts while shielding members from personal liability.

With more states considering similar measures and global DAO adoption rising, the U.S. is moving closer to mainstream recognition of decentralized governance.

Bulleted Takeaways

• Alabama becomes the second U.S. state to grant legal status to DAOs under the DUNA Act
• DAOs can now own property, enter contracts, sue and be sued, while members are shielded from personal liability
• Minimum of 100 members and a nonprofit purpose are required for legal recognition
• Governance can operate entirely on-chain through smart contracts and voting mechanisms
• Wyoming led the way in 2021, and West Virginia is awaiting approval of its own DUNA Act
• Over 13,000 DAOs exist globally, controlling more than $24.5 billion in assets
• Legal recognition is expected to boost adoption, institutional participation, and innovation in blockchain governance