Alabama has formally recognized DAO-like entities under state law, marking the second such move in the United States. The decision gives decentralized groups clearer legal footing, reducing uncertainty around liability and governance structures.
Governor Kay Ivey signed Senate Bill 277 into law on Wednesday, according to the Alabama Secretary of State. The legislation creates a framework for decentralized unincorporated nonprofit associations (DUNAs), allowing blockchain-based governance through smart contracts. The law takes full effect on Oct. 1, 2026.
Can DAO Legal Status Accelerate Institutional Adoption?
The move places Alabama alongside Wyoming, which enacted similar DAO legislation in 2024. But, broader adoption remains fragmented across jurisdictions, with states like West Virginia still reviewing comparable bills. This patchwork approach continues to complicate compliance for multi-state decentralized organizations.
Under the law, a DUNA must include at least 100 members joined by mutual agreement. These entities can own property and generate revenue, yet profits cannot be distributed to members, preserving nonprofit status. Still, the framework introduces limited liability protections, shielding participants from personal exposure tied to organizational actions.
“Alabama is the second state after Wyoming to provide legal status and limited liability protections to DAOs,” said Miles Jennings, Head of Policy at a16z Crypto.
He added that the law enables decentralized communities to “build, govern, contract, and scale in the real world,” while noting similar efforts emerging in other states.
The next catalyst lies in whether additional U.S. jurisdictions adopt comparable frameworks, particularly as West Virginia’s pending bill awaits final approval and could further standardize DAO recognition nationwide.
