Wyoming Statute §17-31, enacted April 2021 as the "Decentralized Autonomous Organization Supplement" to the Wyoming LLC Act, is the world's first legal framework that recognizes DAOs as legal persons with limited liability protection.
Key Provisions
§17-31-101: Definitions
Defines a "decentralized autonomous organization" as an LLC formed under this chapter, with governance conducted (partially or entirely) via smart contract.
§17-31-102: Formation
A DAO is formed the same way as a standard LLC, plus the required disclosures under §17-31-103 through -106.
§17-31-103: Naming Requirements
Company name must include "DAO", "LAO", or "DAO LLC". Cannot use standard LLC abbreviations alone. Rationale: puts counterparties on notice of the special governance structure.
§17-31-104: Management Mode
Articles must declare whether management is algorithmically managed (smart contract executes governance decisions) or member-managed (traditional off-chain governance). No hybrid category exists under the statute.
§17-31-105: Public Smart Contract Disclosure
Governance smart contract identifier(s) must be publicly disclosed via the Articles of Organization. Any material amendment to the smart contract (upgrade, migration, parameter change beyond original scope) triggers a Certificate of Amendment filing.
§17-31-106: Public Records
All filings are public. Unlike some LLC jurisdictions, DAO LLC members are also disclosed (or at minimum the initial organizer). Anonymous DAO formation is not possible under Wyoming law.
§17-31-114: Membership Interests
Default: membership interests (typically represented by governance tokens) are freely transferable unless the operating agreement or the smart contract itself restricts transfers.
§17-31-115: Dissolution by Inaction
If the DAO fails to hold a documented member vote for 12 consecutive months, it is deemed administratively dissolved by operation of law. This is a trap for dormant DAOs — even a single procedural vote per year keeps the entity alive.
§17-31-116: Fiduciary Duties
Members and (if member-managed) managers owe fiduciary duties consistent with standard Wyoming LLC law, unless expressly waived in the operating agreement. Algorithmic mode: the smart contract itself does not owe fiduciary duties, but human contributors (developers, council members) may.
How Wyoming Compares to Other Jurisdictions
| Jurisdiction | DAO recognition | Notes |
|---|---|---|
| Wyoming | Full LLC under §17-31 (2021) | First US state; most permissive |
| Tennessee | Full LLC under similar statute (2022) | Model based on Wyoming |
| Vermont | Blockchain-Based LLC (BBLLC, 2018) | Different framework, less DAO-specific |
| Marshall Islands | DAO LLC (2022) | Popular offshore DAO wrapper |
| Cayman Islands | Foundation Company (2017) | Not LLC-based; no members |
Practical Implication
§17-31 is deliberately light-touch — Wyoming trusts operating agreements to handle the details, and only imposes structural requirements at Articles level. This makes Wyoming attractive for straightforward DAO structures but requires disciplined operating agreement drafting.