A Californian Assemblymember has drafted a bill to provide a legal framework to allow DAOs among acceptable business entities.
On Monday, San Francisco Assemblymember Matt Haney introduced Assembly Bill 1229 to bring a legal framework to Decentralised Autonomous Organisations (DAOs).
The bill already has the support from the Crypto Council for Innovation and prominent crypto investment firm Andreessen Horowitz.
Assembly Bill 1229 will change California’s corporate code to include DAOs, blockchain networks, and smart contract protocols – letting DAOs register themselves as official incorporated business entities within the state, and will provide better protections for Californians who participate in the Web3 economy.
DAOs – decentralised autonomous organisations – are organisational structures where leadership roles and responsibilities are distributed amongst its members. In operating, DAOs use governance tokens to vote on proposed actions so the decision-making is decentralised.
“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,” said Miles Jennings, General Counsel at a16z crypto.
Upon being reached out, a spokesperson for Assemblymember Haney said that the bill is a measure to make sure Californian laws are up-to-date with technology. “For us, we’ve seen only three paths forward, environmental tech, biotech, and we think that Web3 needs to be firmly rooted in California. And that’s what this bill is about.”
“Our goal is to educate our colleagues on blockchain basics, California corporations, and the workings of Decentralised Autonomous Organizations (DAOs),” the spokesperson continued. “By establishing a legal framework around DAOs, we can create certainty, legitimise this organisational type, and ensure appropriate taxation in California.”
The proposal of Assembly Bill 1229 comes at a time where regulators and governments around the world have their focus on cryptocurrency and the blockchain.
The US has been known for its unfriendly attitude towards the industry, leading to crypto crackdowns by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in the country after the collapse of crypto exchange FTX in November. As US regulators have been aggressive against crypto, critics have noted that the US may be losing its place as a world financial power.
“Whatever you call this new technology—blockchain, web3, or crypto—we know that it’s the future of tech,” Assemblymember 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.”