The Value and Limitation of Blockchain Act in Wyoming, USA

For blockchain developers, especially those familiar with Wyoming’s Blockchain Bill 38, the Vermont Bill For Blockchain provides a framework for decentralized autonomous organizations (DAOs) Paving the way for major new breakthroughs. The Wyoming legislature enacted the legislation last week, which would allow DAOs to be formed as limited liability companies. For DAOs, this could be a huge step forward, the bill will allow DAOs to operate, broker assets and manage their affairs on-chain. More notably, token holders will be allowed to enter into contracts and conduct business as individuals, which will help realize one of Ethereum's core visions.

Decentralized governance solutions are gaining popularity in distributed finance (DeFi) due to their strategic advantages over traditional institutions. DAOs constitute the next transformative phase of business, enabling anyone within an organization to bring in ideas, have their peers evaluate them, and rely on blockchain technology for security and automation to reduce costs.

The U.S. state of Wyoming may consider allowing DAOs to be officially registered in the state: Jinse Finance reported that a working group of the U.S. Wyoming State Legislature dedicated to blockchain technology and innovation has proposed a bill. The bill, if approved, would allow decentralized autonomous organizations (DAOs) to officially register in the state. The bill was originally introduced in mid-January and was sent to the Wyoming Senate's Combined Corporations, Elections and Politics subcommittee on Feb. 3. Essentially, the bill seeks to allow DAOs to be chartered and recognized by state governments. They will be able to form as limited liability companies, and the terms DAO, LAO or DAO LLC will appear in the official body's registration. [2021/2/5 18:56:49]

A number of other high-impact developments added momentum, too, with the February 2021 SEC Vs Ripple pre-trial hearing also causing a stir.

Blockchain and encrypted assets are almost everything for those who are immersed in this industry. In fact, this industry is beginning to come out of its early stage. Many businesses in the cryptocurrency market are booming amid an ongoing bull run that has seen eye-popping numbers in the latest non-fungible token (NFT) frenzy. Despite the massive capital investment in various networks and their associated products, the building and management of blockchain projects is still fairly new.

Sound|Founder of Cardano: Wyoming is a hotbed of encryption activities: Jinse Finance reported that Charles Hoskinson, co-founder of Ethereum and founder of Cardano, said that Wyoming is a hotbed of encryption activities. In the next five to ten years, there will be Lots of great work will be created. Hoskinson said that a lot of things are happening in Wyoming at the moment, which is unthinkable for encryption. Most exciting are some special purpose fully-reserved banks. These banks will be able to handle fiat and crypto assets and be useful for future digitization efforts such as creating stablecoins and custody solutions. It is reported that "speedy banks" in Wyoming, which were legalized last year, are new types of banking entities that specialize in cryptocurrency transactions. [2020/2/21]

Although the growth space of blockchain is almost limitless, distributed finance is still a drop in the ocean compared to traditional global finance. If the goal is to democratize commerce through distributed technology, any new legislation must be well thought out so as not to stifle innovation. A huge concern in this regard is that lawmakers will fail to appreciate the complexities of distributed governance and base regulation on an overly simplistic model.

News | Wyoming passed the encryption bill to clarify that digital assets are legal property: According to Coindesk, the Wyoming House of Representatives recently passed two major bills on cryptocurrency regulation - House Bills HB0074 and HB0185. HB0074 provides services for businesses that may not have access to traditional banking services, including blockchain businesses. HB0185 allows securities to be issued in the form of tokens. Last week, the Wyoming House of Representatives approved bill SF0125, making digital assets property. The bill will go into effect on July 1 after the state's governor, Mark Gordon, approves and signs it into law. [2019/2/20]

Now that the Vermont blockchain bill has passed the Wyoming legislature, it seeks to properly define a legal landscape for a new wave of crypto companies. While there is still debate about its net effect, we may have moved a step closer to an important question: What would it mean if the code did become law?

News | IOHK will relocate from Hong Kong to Wyoming, USA: According to Coinpost, Charles Hoskinson, CEO of ADA technology development company IOHK, said in an interview that IOHK will relocate from Hong Kong to Wyoming, which is friendly to the blockchain, and will Become a registered company in the United States. [2019/1/13]

The law imposes different responsibilities on both individual and corporate legal persons. Traditionally, if you want to do business with anyone, you need the legal personality conferred by the "corporate shield" to bear the corresponding limited liability. One of the limitations that Decentralized Autonomous Organizations (DAOs) currently face is the lack of any legal guarantees to protect any individual from personal liability for the actions of the company.

Passing legislation granting “corporate shields” could provide much-needed reassurance to citizens and private-sector innovators leveraging smart contracts for coordination, providing protection for crypto entrepreneurs and communities so they can innovate on a firmer footing. It's like a match between the legal "Yin" and the "Yang" of the crypto world, however, until such crypto-friendly legislation becomes commonplace, DAOs and crypto networks will be excluded from the wider global economy outside.

Policy | Wyoming passed the Amendment to the Utility Token Act: According to cointelegraph, the U.S. state of Wyoming passed the Amendment to the Utility Token Act, which defines blockchain tokens with special property characteristics as intangible personal assets, tokens will not be defined as a security. [2019/1/12]

On the other hand, Wyoming’s blockchain bill deals primarily with issues of legal personality and limited liability. There are several other thorny issues to be resolved in the broader legal relationship, namely real estate, privacy, arbitration, tax and securities law. While enterprise protection is an important step, it is only part of the roadblocks preventing innovation in today's decentralized communities.

Additionally, the bill does not provide a direct definition of a DAO, nor does it provide a definition for the referenced concept of "algorithmic governance." In the section on voting, the bill lays out strict and specific rules for distributing members' entitlements: either purely on the basis of economic interest, or entirely equal. This ignores years of research and experimentation with alternative decision-making algorithms like quadratic voting and reputation-based governance.

Of course, this bill focuses on the incorporation part, and like a lot of legislation, this bill will be subject to amendments and amendments. Ultimately, many of the most important issues will need to be decided by federal regulators through case law in the courts and the ongoing development of a body of jurisprudence.

It's easy to compare DAOs to corporations, but that only scratches the surface. Distributed autonomous governance technology can be applied to a variety of different use cases such as political action committees, universities, municipalities, and virtually any other traditional institution. They also have the potential to spark a wave of digitally native entities such as data alliances and platform partnerships.

Similarly, legitimate cases demonstrating the utility of distributed governance solutions have emerged recently. Omnium, Europe's largest cultural organization, recently deployed decentralized voting technology at its annual general meeting for the third year in a row, showcasing the largest use case for blockchain voting in history. The same decentralized voting solution has been successfully used in a digital voting pilot project to coincide with Catalonia’s regional elections this past February.

These cases provide a springboard for blockchain projects. But they must be grounded in a pragmatic approach, as the limitations of blockchain exist in contemporary economic and regulatory paradigms. By facilitating community-based decision-making, data provenance, and high efficiency, the Aragon project provides the operational base layer for over 1,600 DAOs. As of this writing, DeepDAO has a market cap of $800 million, giving some realism to the assertion that DAOs are changing the world.

If the legislature's regulations simply view DAOs as more efficient and transparent equivalents to traditional corporations, they may implement laws that restrict even more new things to DAOs outside the corporate sphere. Wyoming’s blockchain bill is a complex document in which lawmakers demonstrated a deep understanding of DAOs, consulting with some of the developers and operators in the space. However, while this is a laudably important step, the bill itself won't have much impact on the DAO's trend.

This reflects the importance of collaboration between legal professionals and coding architects in drafting policies for emerging industries. It also provides a unique, competitive opportunity for aspiring professionals to specialize in smart contracts and more closely-coupled legislation. Perhaps we will see young technologists advising on crypto-related legal cases and legitimizing DAOs.

DAOs have not yet received legal recognition, which is why Wyoming's blockchain bill is so important. Instead of forcing this delicate approach to corporate governance into contemporary legal models, we should provide collective digital entities (DAOs) with the same legal safeguards enjoyed by traditional organizations.

Cryptographic agencies should be treated as hybrid entities, based on their own set of custom rules and protection management. Only then can DAOs begin to truly democratize governance by leveraging their unique strengths of secure and transparent record-keeping, autonomous enforcement, and borderless participation to realize their full potential in global marketplaces.

Source

https://www.nasdaq.com/articles/the-pursuit-for-legislative-legitimacy%3A-crypto-corporations-and-wyomings-blockchain-bill (This article is the opinion of the author and does not represent the position of "Lianxin". )

Author | Ori Shimony

Compile | Chen Yiming

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