Key Takeaways:
Alabama has enacted the Decentralized Unincorporated Nonprofit Association (DUNA) Act, becoming the second U.S. state to grant legal status and limited liability protections to decentralized autonomous organizations. The move provides a formal legal structure for internet-native groups, following a similar law passed in Wyoming in March 2024.
The legislation “embraces innovation, protects participants, and empowers internet-native communities to compete with big tech incumbents,” Miles Jennings, head of policy and general counsel at a16z Crypto, said in a statement. He added that as federal crypto market structure legislation moves closer to becoming law, builders need effective domestic legal structures.
The DUNA Act, or Senate Bill 277, was introduced by Republican Senator Lance Bell in February and passed the House with an 82-7 vote. To qualify for the protections, a DAO must have at least 100 members and be formed for a common nonprofit purpose, such as governing a blockchain protocol. The law allows governance to operate entirely via smart contracts and gives DAOs the ability to own property, enter into contracts, and sue or be sued as a legal entity.
This legislation provides a solution to the long-standing legal ambiguity of how DAOs exist and operate in the real world, giving them the "certainty to build, govern, contract, and scale," according to Jennings. The development comes as a similar DUNA bill in West Virginia, HB 5060, awaits its governor's signature after passing the state's House on March 4. Wyoming became the first state to legally recognize a DAO in July 2021 and codified its DUNA framework earlier this year.
The new law in Alabama could help attract a share of the rapidly growing DAO ecosystem. More than 13,000 DAOs exist globally, controlling collective treasury assets that surpassed $24.5 billion as of 2025, according to data from CoinLaw. Over 85% of these organizations are currently based on the Ethereum network and its associated layer-2 scaling solutions, as reported by PatentPC in March.
This article is for informational purposes only and does not constitute investment advice.
