Cryptocurrency Legals Sorted – Wyoming’s New DAO LLC Supplement

The market capitalization of cryptocurrencies has seen a dramatic increase, and the governments have finally decided to catch up. While most major governments are in the works to launch their own digital currency and El Salvador already legalizing BitCoin as legal tender, Wyoming has passed a DAO Supplement to the LLC Act offering a clear legal status and a definite business structure to Decentralized Autonomous Organizations (DAO). 

Wyoming’s DAO Supplement to LLC Chapter

A bill was passed on March 17, 2021 by the Wyoming’s State Senate defining the legal framework for DAOs. 

The DAO Supplement bill defines DAO as Limited Liability Company (LLC). This means a lot to the Crypto developers, believers and enthusiasts. Now DAOs have a definite legal structure and most importantly the uncertainties revolving around liability and taxation or sorted. 


While there is still a long way to go in terms of legals, at least some major issues are addressed through the first ever legal identification and accommodation for DAOs in the US state of Wyoming. 

An DAO LLC registered under Wyoming LLC Chapter means it is a legal entity separate from its members. DAOs members/token-holders are not liable personally. The DAO LLC also is defined as a ‘pass-through’ entity by default, meaning no corporate taxes and the profits are passed on to the members of the LLC which are taxed under personal income tax. 

Wyoming Law governs the DAO LLC both in terms of liability and operations similar to that of an LLC unless specifically mentioned in the DAO Supplement.

What does it mean for DAO members/crypto holders?

Wyoming’s DAO supplement is the first of its kind worldwide to define a legal structure to Decentralized Autonomous Organizations. Previously the DAOs were generalized as Corporations without centralized and formal contracts between members. The liability and taxation was a grey area that was left in the hands of courts if and when the dispute arises. 

  • Offering LLC status to DAO might accelerate the already speeding growth of the crypto market with more DAOs formed in LLC. 
  • Members of DAO shouldn’t be worried about the liability irrespective of the value held. 
  • The previously unclear line about taxation also is clear now. There is no special tax clause in the DAO supplement directing to file tax like any other LLC member would do. Plus, foreighn nationals are subjected to 30% Federal withholding tax on US source income. 

What does it mean to DAO/cryptocurrency creators and developers?

  • The legality of the DAO is not a topic of debate anymore, at least in the US. Developers can come forward with surety of a clear identity for their digital currency projects. 
  • Approval of DAO in Wyoming will pave the way for many states and countries to come forward with their own set of legal requirements that will help shape the future of crypto trading and use. 
  • Wyoming being the torch bearer of the movement will get a lot of initial registrations helping the economy of the state boom without any subsidy or building expensive infrastructure.  

How to register a DAO LLC in Wyoming?

An DAO LLC has a similar process of formation to a traditional LLC in Wyoming. Original articles of organization along with a confirmed copy needs to be submitted to the Secretary of state for approval. The only major difference in the registration process is in the article of organization to compulsorily include a statement that the company is a DAO. 

The articles of organization require to include further information on smart contracts and others. To know more, get in touch with us for free

DAOs are decentralized and don’t require any office for functioning. They are managed by a network of systems called the blockchain which generate smart contracts among members. But every DAO is required to have a registered agent in Wyoming during business formation and throughout its operation.