California may soon have a legal framework for decentralised autonomous organisations (DAOs). Assembly Bill 1229, which already has the backing of renowned cryptocurrency investment company Andreessen Horowitz and the Crypto Council for Innovation, was introduced on Monday by San Francisco Assemblymember Matt Haney.
Haney optimistically stated that, “Whatever you call this new technology, blockchain, web3, or crypto, we know that it’s the future of tech.” He also added that, “It would be devastating to both our economy and our identity as a state to lose California’s place as the world’s tech leader because our laws are not keeping up with the times.”
DAOs, blockchain networks, and smart contract protocols would be included in the state’s corporate law as a result of Assembly Bill 1229. Control is shared among the members of a decentralised autonomous organisation (DAO), which is a type of organisational structure.
The law would provide security for the people of California working in the Web3 economy while allowing DAOs to incorporate in California and pay taxes. A decentralised decision-making process is made possible by DAOs using smart contracts on a blockchain, and members vote on proposed actions using governance tokens.
A spokesperson for Haney reflected the necessity to make sure the laws keep up to date with the developing technology. They stated that, “For us, we’ve seen only three paths forward, environmental tech, biotech, and we think that Web3 needs to be firmly rooted in California. And that’s what this bill is about.”
Looking into their goal, the spokesperson added that, “Our goal is to educate our colleagues on blockchain basics, California corporations, and the workings of Decentralised Autonomous Organizations (DAOs). By establishing a legal framework around DAOs, we can create certainty, legitimise this organisational type, and ensure appropriate taxation in California.”
The introduction of the bill corresponds with the increasing attention that governments and officials throughout the globe are giving to cryptocurrencies. After FTX failed in November, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) launched a crackdown on cryptocurrencies in the United States.
Even with the active stance put by the assemblymember, there are concerns among the opposition which includes Rep. Brad Sherman, a Democrat from Southern California, who voiced worries about the digital currency by calling it a “garden of snakes”. This particular statement was shared during the hearing of the FTX Collapse.
However, California’s approach to regulating and developing in the field of digital assets is being keenly monitored by stakeholders globally, with backing from notable figures in the crypto business. By giving DAOs credibility, the golden state may draw additional investors and innovators, enhancing its position as an epicentre in high-tech and promoting the development of the Web3 market. Such developments will also be the driving force for other states in doubt to adopt changes in the market.