Two More U.S. States Grant DAOs Legal Recognition

Alabama and West Virginia have become the most recent U.S. states to grant legal status to decentralized autonomous organizations (DAOs). The DUNA Act allows qualifying DAOs to operate as recognized legal entities with rights to own assets and enter contracts. This reduces legal risk for crypto governance structures and gives them a clearer path to operate in the U.S.

What the new law actually changes

The law, signed in Alabama by Governor Kay Ivey, introduces a structure called a decentralized unincorporated nonprofit association (aka the DUNA), according to the April 2 post by a16z’s crypto’s Head of Policy and General Counsel Miles Jennings and Policy Partner Aiden Slavin.

West Virginia followed suit, just 24 hours after Alabama, in a move that Jennings referred to in his X post as “another great step forward for innovation in the U.S,” profusely thanking the persons involved in its enactment.

In simple terms, it turns DAOs from loose online groups into legally recognized entities. That means they can sign agreements, hold property, appear in court, and interact with traditional businesses. Members and contributors are also shielded from personal liability, which has been one of the biggest risks around DAO participation.

The model follows a similar framework first introduced by Wyoming, but Alabama makes a few adjustments. It narrows how membership rights are defined and allows certain distributions that Wyoming restricts.

The core idea stays the same: give decentralized communities a legal wrapper that matches how they actually operate.

What this means for crypto builders

Until now, many DAOs relied on offshore foundations or informal setups. That created problems like legal uncertainty, tax ambiguity, and exposure to unlimited liability, which made it difficult for projects to scale or work with traditional institutions.

This law changes that dynamic: by giving DAOs legal personhood, it removes one of the biggest friction points between onchain governance and the real world.

Jennings and Slavin described the shift as critical for crypto’s future, noting that decentralized governance needs a legal structure that regulators can actually work with:

“As federal crypto market structure legislation moves closer to becoming law, builders need effective domestic legal structures.”

More states are already moving in the same direction. With Wyoming and now Alabama and West Virginia setting the template, DAO structures are starting to move out of the gray zone and into formal legal frameworks.

For builders, that means fewer workarounds and a more direct path to building compliant, onchain organizations inside the US.