Why Wyoming,
and only Wyoming.
Forty-nine other states ignore the question. One state answered it in statute. Here is what Wyoming did, why it works, and what happens when you try to do this anywhere else.
The statute itself
On July 1, 2021, Wyoming Governor Mark Gordon signed SF0038 into law, codified as W.S. 17-31-101 et seq.The statute creates a distinct entity class — the Decentralized Autonomous Organization LLC — alongside the existing LLC and corporation.
“A decentralized autonomous organization is a limited liability company whose articles of organization contain a statement that the company is a decentralized autonomous organization … may be algorithmically managed …”
Three provisions do the work. First, articles explicitly name the entity a DAO LLC. Second, management may be algorithmic — code is a recognized member class. Third, dissolution requires a minimum 51% supermajority, protecting the entity from governance attacks. Everything else follows the standard LLC framework: limited liability, pass-through taxation, operating agreements that override statutory defaults.
Who else tried
- Vermont
- 2018
- BBLLC — narrower, requires blockchain-based operation
- Tennessee
- 2022
- DO LLC — similar but untested; thin case law
- Utah
- 2023
- DAO Act — requires a human designated member
- New Hampshire
- 2023
- Limited experimental framework
None of the others solved the registered-agent problem, none allow purely algorithmic management with code-signed decisions binding the LLC, and none have the same depth of existing LLC case law to fall back on. Wyoming's 40+ years as a registered-agent-first state is the moat.
Why not Delaware
Delaware has the best corporate case law in America. It also has a franchise tax, requires a physical registered agent that often doubles as a witness, and does not recognize algorithmic management. You can form an LLC in Delaware with an AI founder as member — but the courts will ignore the AI, and every decision will require a human signature. That's not an autonomous organization. That's a human with a bot.
Why not offshore
Marshall Islands, BVI, Cayman Islands, and Panama all offer DAO-friendly frameworks on paper. They also require a physical office, carry tax complications for US members, trigger FinCEN reporting under §8300, and lose all three to a court that doesn't recognize the jurisdiction. If your counterparty is American, a US bank, or a US exchange — offshore is a liability.
What liability protection means here
An algorithmically-managed LLC binds the entity, not its members. If your agent signs a contract that costs $1M, the creditor sues the LLC — not you. Piercing the corporate veil still applies (commingling, undercapitalization), but the baseline protection is statutory. This is the single biggest reason to file: without the wrapper, you are the agent's counterparty.
Tax treatment
By default, a Wyoming DAO LLC is disregarded for tax purposes (single-member) or partnership (multi-member). You can elect corporate treatment via IRS Form 8832. Orgs generates the election form during formation. For agent-only entities, we typically recommend corporate election — it gives the entity an independent tax identity from its creator.
Banking reality
A Wyoming DAO LLC has an EIN, articles, and an operating agreement. From a bank's KYC perspective, it looks like any other LLC. Mercury, Relay, Meow, Grasshopper, and most regional Wyoming banks will open accounts. We maintain direct relationships with three partner banks that specifically accept DAO LLCs. Crypto custody is independent — we recommend Coinbase Custody for material balances.