Alabama Grants Legal Status to DAOs Under New Nonprofit Association Law
Alabama’s new law recognizes qualifying DAOs as nonprofit associations, allowing them to own property, enter contracts, and access limited liability protection under specified membership and purpose requirements.
Summary
Alabama signed a bill granting legal status to qualifying decentralized autonomous organizations under a nonprofit association framework. The law allows eligible DAOs to own property, sign contracts, and sue or be sued, while also providing limited liability protection. To qualify, applicants must have at least 100 members and pursue a shared nonprofit purpose. The measure makes Alabama one of the few U.S. states to formally recognize DAOs in law.
Terms & Concepts
- DAO: A decentralized autonomous organization, typically governed by members through blockchain-based rules, proposals, and voting mechanisms.
- Limited liability: A legal protection that generally prevents members from being personally responsible for an organization’s debts or legal obligations.
- Nonprofit association: A legal structure for groups organized around a shared noncommercial purpose, which can allow them to hold property and enter contracts.