Three U.S. States Now Grant DAOs Full Legal Status as DUNA Act Momentum Accelerates

Key Takeaways:

Alabama Governor Kay Ivey signed Senate Bill 277 into law, and West Virginia Governor Patrick Morrisey signed HB 5060 on April 2, making three U.S. states that now provide decentralized autonomous organizations with legal status under the Decentralized Unincorporated Nonprofit Association (DUNA) framework. Alabama's bill was introduced in February by Republican Senator Lance Bell and passed the Alabama House 82-7 with 16 abstentions on March 17. As Tech Buzz reported, what took Wyoming 18 months to accomplish alone just happened twice in two days.

Wyoming enacted its own DUNA Act in March 2024 and approved the first legally recognized DAO in the United States in July 2021. Alabama's version follows the same structural logic: DAOs organized as DUNAs can enter contracts, own property, sue and be sued, and provide members with limited liability protection, all without requiring full corporate formation.

The problem the DUNA Act addresses has been building for years. Over 13,000 DAOs operate globally, managing more than $24.5 billion in collective treasury assets according to CoinLaw. Ethereum and its layer-2 networks host more than 85% of them, per PatentPC. The average DAO treasury sits at roughly $1.2 million.

None of this is new. What's new is that most of these organizations have operated in legal gray zones. Without recognized legal status, DAO members face a persistent risk: courts can treat an unregistered DAO as a general partnership, which means every member becomes personally liable for the organization's actions. That's the opposite of what decentralization is supposed to achieve.

Wyoming was the first to fix this. Alabama was the second. West Virginia just became the third. And the pattern is accelerating.

The Alabama DUNA framework requires at least 100 members and a nonprofit purpose, though the structure allows for-profit activities tied to the organization's mission. Members receive limited liability protection similar to what LLC or corporate structures provide, but without the overhead of traditional corporate formation.

The bill creates a pathway for blockchain-based organizations to operate in the real world. A DUNA can open bank accounts, sign leases, engage vendors, and hold assets. It can also shield its members from personal exposure when the organization takes actions within its stated purpose.

Miles Jennings, head of policy and general counsel at a16z Crypto, called the passage significant. "Decentralized governance is essential to crypto's future," Jennings said. "It's one of the core constructs in market structure legislation."

That framing matters. The CLARITY Act, expected to hit Senate Banking Committee markup by mid-April, would establish the first comprehensive federal regulatory framework for digital assets. The DUNA structure provides the legal wrapper that DAOs need to interface with whatever federal framework emerges.

Wyoming's 2024 DUNA Act was proof of concept. Alabama and West Virginia are proof of momentum. As of late 2025, only four DUNAs existed or were proposed: Uniswap's DUNI, Syndicate Network Collective, WYDE, and Compound Foundation. The question of whether the framework represented DAO 2.0 or just DAO 1.5 hinged on whether more states would adopt it. Two just did in the same month. Alabama's legislative vote was lopsided (82-7 is not a contested bill), and the political composition matters. All three states are deep-red. DAO legal infrastructure is not a partisan issue in state legislatures. It's an economic development play.

The two versions share the same structural DNA. Both create a new legal entity type for decentralized organizations. Both provide limited liability. Both require nonprofit purpose. The differences are in implementation details and effective dates, not in philosophy.

The most notable part of this is the speed. West Virginia's HB 5060, introduced by Representative Tristan Leavitt, passed the House on March 4 and was signed into law on April 2. West Virginia explicitly positioned its DUNA Act as economic development, designed to "attract crypto innovation to the state by creating a legal framework for DAOs." Three states have enacted DUNA legislation within two years of Wyoming's original law. a16z Crypto posted the West Virginia signing on X with two words: "Another one."

For any decentralized project operating in the United States, the DUNA framework creates an option that didn't exist before 2024. A DAO can now incorporate as a legally recognized entity in a U.S. jurisdiction, receive limited liability protection, and operate without the overhead of a traditional corporate structure.

That includes projects building on Base, Ethereum's layer-2 networks, and every other blockchain where governance tokens direct treasury allocation. The DUNA structure was designed specifically for organizations where decision-making happens on-chain and membership is defined by token holding or protocol participation, not by shareholder agreements. The framework has also been proposed as a potential model for addressing gaps in federal food assistance, where community-governed treasuries could deploy resources faster than congressional appropriations.

The broader context is the convergence between state-level legal infrastructure and federal regulatory momentum. The CLARITY Act would define how digital assets are regulated at the federal level. The GENIUS Act, signed last July, established the first comprehensive federal framework for payment stablecoins. And now three states are building the legal wrappers that let blockchain organizations participate in that regulated environment.

The infrastructure is building from both directions simultaneously. Federal regulation coming down. State-level legal structures coming up. The organizations in the middle now have real options.

Worth watching closely.

Q: What is the DUNA Act? A: The Decentralized Unincorporated Nonprofit Association (DUNA) Act is state legislation that grants DAOs legal personhood and limited liability protection, allowing them to contract, own property, and shield members from personal liability.

Q: Which states have passed DUNA legislation? A: Wyoming enacted the first DUNA Act in March 2024. Alabama and West Virginia both signed their versions into law in 2026, bringing the total to three states with DUNA legislation.

Q: How many DAOs exist worldwide? A: Over 13,000 DAOs operate globally with more than $24.5 billion in collective treasury assets, according to CoinLaw, with Ethereum and its layer-2 networks hosting more than 85% of them.

Q: Does the DUNA Act apply to for-profit blockchain projects? A: The DUNA structure requires a nonprofit purpose but allows for-profit activities tied to the organization's mission, making it flexible enough for blockchain protocols with both governance and commercial functions.

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