Alabama has become the second US state to grant legal status to decentralized autonomous organizations, following in the footsteps of Wyoming. Governor Kay Ivey signed the Decentralized Unincorporated Nonprofit Association (DUNA) Act, also known as Senate Bill 277, into law after the state House passed it by a vote of 82 to 7 with 16 abstentions on March 17. The bill was originally introduced in February by Republican Senator Lance Bell. The signing was confirmed by a16z Crypto.
The legislation addresses a longstanding legal ambiguity surrounding DAOs — specifically, how these organizations exist and operate within real-world legal frameworks. Under the new law, qualifying DAOs receive full legal entity status, meaning they can own property, enter into contracts, and initiate or be subject to legal proceedings. Crucially, individual members and administrators are shielded from personal liability, offering protections similar to those enjoyed by members of traditional incorporated entities.
To qualify under the act, a DAO must have at least 100 members united around a common nonprofit purpose, such as governing a blockchain network or a smart contract system. Governance structures can operate entirely through blockchain technology, with voting, proposals, and consensus mechanisms all recorded on-chain. This allows decentralized communities to function within a recognized legal structure without abandoning the technological foundations that define them.
Miles Jennings, head of policy and general counsel at a16z Crypto, commented on the bill’s significance, stating that decentralized governance is essential to the future of crypto and represents a core construct in market structure legislation. He added that the law gives decentralized communities the certainty needed to build, govern, contract, and scale in the real world. Jennings also noted that as federal crypto market structure legislation moves closer to becoming law, builders require effective domestic legal structures to operate within.
A comparable bill, HB 5060, introduced by Representative Tristan Leavitt in February, passed the House in West Virginia on March 4 and is currently awaiting the governor’s signature. Wyoming’s own DUNA Act was signed into law by Governor Mark Gordon in March 2024, and the state had previously approved the first legally recognized DAO in the United States back in July 2021.
The broader DAO ecosystem has grown substantially in recent years. According to CoinLaw, over 13,000 DAOs exist worldwide as of 2025, with collective treasury assets surpassing $24.5 billion. The average DAO treasury holds approximately $1.2 million, and Ethereum along with its layer-2 networks hosts more than 85% of all DAOs, according to a March report by PatentPC. Alabama’s move signals a growing recognition among US states of the need to accommodate blockchain-based organizational structures within existing legal systems.
Originally reported by CoinTelegraph.
