Utah Legislature Passes DAO Bill, Will Take Effect in 2024

According to Nation Law Review, the Utah State Legislature passed HB 357 on March 1, the Utah Decentralized Autonomous Organization Act (Utah DAO Act), becoming the first legislation to recognize decentralized United States of America autonomous organization (DAO). The Utah DAO Act grants DAO: 1. Legal recognition and limited liability protection, addressing the limitations of the previous method of "packaging DAO into an LLC entity"; 2. Establishing a clear tax treatment; 3. No implied 4. Use "rules" to protect the anonymity of DAO participants; 5. Incorporate technical gatekeeping to ensure that DAO is indeed a DAO. The Utah DAO bill passed with slim approval in both the House and Senate committees, however there were some concerns and compromises. The three main issues are: 1. The utterly "irresponsible" anonymity of the DAO's foundation; 2. The (original) tax language's inconsistency with underlying state and federal tax realities; Get ready to process new applications. The compromise approach is as follows: 1. Accountability: Require each DAO to have a public legal representative, while still allowing DAO participants to remain anonymous. Legal representatives are not jointly and severally liable; 2. Tax Language: Invite the Utah State Tax Commissioner’s Office to participate, propose acceptable tax language, and be consistent with the tax complexity of the DAO; 3. Start time: Agree to set the effective date of the bill for 2024.