# Wyoming DAO Legal Status and Federal Court Rulings

**Published:** 2026-09-12T12:03:43.227Z  
**Topic:** Dao Crypto  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/566aee9b-5ae3-48f7-b2dd-4595891fce23

Wyoming’s new DUNA law allows DAOs to gain legal entity status starting July 1, 2024, as federal courts increasingly reject claims that DAOs are just software.

Wyoming Governor Mark Gordon signed legislation on March 7, 2024, creating a new legal framework that allows Decentralized Autonomous Organizations (DAOs) to register as "decentralized unincorporated nonprofit associations" (DUNAs) starting July 1, 2024 [1]. This move provides a formal legal structure for decentralized groups, contrasting with recent federal court rulings that have increasingly classified DAOs as general partnerships subject to traditional liability and securities regulations [2].

| At a glance | |
|---|---|
| New Law Effective Date | July 1, 2024 |
| Minimum DUNA Membership | 100 members |
| Federal Court Ruling | Lido DAO classified as general partnership |
| Primary Regulatory Risk | Unregistered securities litigation |

## New legal status for decentralized entities
The Wyoming Decentralized Unincorporated Nonprofit Association Act aims to resolve the long-standing struggle of DAOs to fit into traditional legal frameworks [1]. By registering as a DUNA, these organizations gain the ability to enter contracts, hold property, open bank accounts, and appear in court while providing members with a liability shield against the actions of the association [1]. To qualify, a DAO must maintain at least 100 members [1]. While the law permits profit-making activities, it prohibits the distribution of dividends or profits to members, requiring that proceeds be directed toward the organization's nonprofit purpose [1].

This legislative effort represents a significant evolution from Wyoming’s 2021 DAO Supplement Act, which previously attempted to integrate DAOs into state LLC laws [1]. Proponents, including prominent investment firms, suggest the DUNA structure could become an industry standard for web3 organizations seeking to operate within legal bounds [1].

## Federal courts reject "software-only" defense
While Wyoming seeks to provide a path for legal recognition, federal courts are simultaneously narrowing the scope for DAOs to claim immunity from existing laws. In a recent class-action lawsuit, a federal judge rejected the argument that the Lido DAO is merely "software" and therefore exempt from legal liability [2]. Judge Vince Chhabria ruled that Lido functions as a "general partnership" under California law, exposing its institutional investors—including firms like Andreessen Horowitz and Paradigm Operations—to potential liability as partners [2].

This judicial stance aligns with the SEC’s long-standing position that DAOs are not exempt from federal securities registration requirements simply by virtue of their decentralized structure [1]. The Commodity Futures Trading Commission (CFTC) has also successfully argued in court that a DAO can be classified as a "person" or unincorporated association, a designation that typically precludes limited liability for members [1]. These rulings suggest that even as states create new legal wrappers, DAOs remain subject to federal scrutiny regarding whether their tokens constitute investment contracts under the *Howey* test [1].

## What to watch
*   **July 1, 2024:** The date the Wyoming DUNA Act takes effect, which will reveal how many existing DAOs choose to adopt the new legal status [1].
*   **Lido Litigation:** Further developments in the class-action lawsuit, specifically regarding how the court’s classification of institutional investors as "partners" impacts the broader venture capital approach to DAO governance [2].
*   **Regulatory Precedent:** Whether other states follow Wyoming’s lead in creating specific DAO legal structures or if federal regulators continue to prioritize the "general partnership" classification in enforcement actions [1, 2].

The tension between state-level efforts to provide legal clarity and federal efforts to enforce existing securities and liability laws remains the central friction point for the industry. Whether the DUNA structure will successfully insulate participants from federal liability or merely provide a clearer target for regulators remains an open question.

## Sources
1. JD Supra — [Wyoming Adopts New Legal Structure for DAOs](https://www.jdsupra.com/legalnews/wyoming-adopts-new-legal-structure-for-3900987/)
2. gizmodo — [Judge Rules Decentralized Autonomous Organizations Aren’t So Decentralized in the Eyes of the Law](https://gizmodo.com/judge-rules-decentralized-autonomous-organizations-arent-so-decentralized-in-the-eyes-of-the-law-2000526564)

---
Cite as: TrendWatcher, "Wyoming DAO Legal Status and Federal Court Rulings", https://www.trendwatcher.in/article/566aee9b-5ae3-48f7-b2dd-4595891fce23