Alabama becomes second state to grant DAOs legal status

Alabama Gov. Kay Ivey has signed the Decentralized Unincorporated Nonprofit Association Act, known as the DUNA Act, granting decentralized autonomous organizations legal status and limited liability protections in the state. The action makes Alabama the second U.S. jurisdiction after Wyoming to recognize DAOs in law.

Enacted as Senate Bill 277, the statute recognizes qualifying DAOs as legal entities that can own property, enter contracts, and sue or be sued, while shielding members and administrators from personal liability. It gives DAOs full entity status without requiring incorporation as traditional companies.

To qualify, a DAO must have at least 100 members organized for a common nonprofit purpose, such as governing a blockchain network or smart-contract system. Governance may operate entirely through code, with voting, proposals and consensus recorded on a blockchain.

Miles Jennings, head of policy and general counsel at a16z Crypto, called decentralized governance “one of the core constructs in market structure legislation.” He described the framework as giving decentralized communities “the certainty to build, govern, contract, and scale in the real world.” Jennings added that as federal crypto market structure proposals advance in Washington, builders “need effective domestic legal structures.”

Republican Sen. Lance Bell introduced the bill in February. The Alabama House approved it on March 17 by a vote of 82–7, with 16 abstentions, before it went to the governor for signature.

Wyoming enacted its DUNA Act in March 2024, after approving the first legally recognized DAO in the United States in July 2021. In West Virginia, a similar DUNA bill, HB 5060, introduced in February, cleared the House on March 4 and awaits the governor’s decision.

Industry data show more than 13,000 DAOs worldwide, with combined treasury assets above $24.5 billion as of 2025. The average treasury is roughly $1.2 million, and over 85% of DAOs operate on Ethereum and related layer-2 networks.

An ECB study found that governance in major DeFi protocols remains highly concentrated, with a small group of token holders exerting significant control over decisions. This raises concerns under MiCA, as platforms like Aave, MakerDAO, Ampleforth, and Uniswap may face regulatory scrutiny due to potential centralization risks.