The Wyoming DUNA and the Future of DAO Legal Frameworks
By: Kyle M. Lawrence, Esq. and Moish E. Peltz, Esq.
Choosing the right legal structure for a decentralized autonomous organization (DAO) can make or break a web3 project before it deploys. From tax efficiency and governance mechanisms to liability protection and regulatory standing, the foundational decisions around entity selection impact everything downstream. In recent years, many founders in the blockchain industry have turned to offshore entities, including Cayman foundations, British Virgin Islands (BVI) companies, Marshall Islands entities, Panama private interest foundations, or Liechtenstein foundations (to name a few). These offshore entities have been viewed as desirable for various reasons, such as opting into an established regulatory regime (even if imperfect), minimizing tax exposure, increasing decentralization (or even striving to make the entity “ownerless”).
Yet Wyoming’s Decentralized Unincorporated Nonprofit Association (DUNA) offers a U.S.-based alternative crafted specifically for DAOs. Below, we weave together a comparative analysis of what makes the Wyoming DUNA unique, how the DUNA compares to the Unincorporated Nonprofit Association (UNA), how the DUNA and UNA compare to offshore entities, and how to choose wisely in 2025 and beyond—especially as U.S. policy pivots to a more crypto-friendly environment under a second Trump administration and blockchain projects increasingly consider coming back onshore.
A Home for DAOs in Wyoming
Imagine giving your DAO its own legal personality in the United States: the ability to establish limited liability for DAO founders and participants, contract, hold assets, sue and be sued, and pay taxes, all while preserving decentralized governance. That’s the promise of a Wyoming DUNA. Enacted in March 2024, the “Decentralized UNA” statute transforms a blockchain community into an unincorporated nonprofit association under Wyoming state law.
Crucially, DUNAs require at least 100 members that come together to fulfill a common nonprofit purpose, ensuring a genuine community rather than a founder-controlled shell. Both DAO participants and token holders enjoy limited liability, mirroring typical corporate protections, so individual participants are shielded from personal liability from lawsuits or creditor claims. Further, since the DUNA’s governing principles can directly embed onchain governance rules, smart contract proposals and token votes can legally bind the organization’s actions—an elegant alignment of code and law.
However, the nonprofit label carries tradeoffs. For example, a DUNA cannot distribute residual profits to members, and any surplus funds must be reinvested into the DAO’s mission, by law. While reasonable compensation for services (such as paying salaries to staff, rewarding contributors or node operators, or reimbursing expenses)—is explicitly allowed, passive profit-sharing falls outside the statute’s comfort zone. Finally, though Wyoming’s DUNA law envisages the future possibility of seeking IRS nonprofit recognition (501(c) status), that remains untested and uncertain in practice as of today and will need to be separately considered.
Bridging the Early-Stage Gap with Wyoming’s UNA
Before the DUNA existed, Wyoming’s Unincorporated Nonprofit Association (UNA) statute already gave member-based organizations a modest legal wrapper. In fact, UNAs are available in a host of other U.S. jurisdictions, including Delaware, Nevada, and Texas. Unlike DUNAs, UNAs impose no membership floor; groups of two or more can form one. Early-stage DAOs that haven’t yet hit 100 active participants may find UNAs to be a more practical stopgap. By drafting bylaws that mirror token-voting procedures, a small team can secure limited liability and hold treasury assets in a recognized, legally protected, U.S. domestic entity. Although UNAs lack the DUNA’s explicit onchain governance provisions, a team overseeing an UNA can be contractually bound to follow the result of a smart contract referendum and related token-holder decisions (so long as those decisions are consistent with the bylaws of the organization). Like DUNAs, UNAs can also seek non-profit status under Section 501 of the Internal Revenue Code.
Then, at least in Wyoming, when growth brings UNA membership above 100 persons, a UNA can convert seamlessly into a DUNA under Wyoming law, unlocking the full suite of blockchain-native legal recognition. In this way, UNAs fill the earliest-stage need for legal cover and then hand off to DUNAs when decentralization reaches critical mass.
Offshore Alternatives: Tried and True Corporate Havens
For projects prioritizing tax neutrality and privacy offshore jurisdictions remain popular. In the Cayman Islands, the 2017 Foundation Companies Law enables an ownerless corporate foundation managed by a board or council, with token holders named as beneficiaries. This model aligns philosophically with DAO ideals yet retains formal directors, whose bylaws can require adherence to token‐holder directives. The Cayman foundation pays zero tax on income or distributions, though it can optionally obtain a 20-year tax exemption certificate, and modest maintenance costs reflect its midrange positioning among offshore options.
The British Virgin Islands (BVI) offers a lean Business Company under the BVI Business Companies Act. With minimal setup costs, a BVI company enjoys 0% corporate, capital gains, and withholding taxes. Governance follows a traditional shareholder‐board model, so token‐holder involvement must be layered through trusts, multisig directors, or contractual agreements. While less “DAO-native” than a foundation or DUNA, its speed and cost efficiency attract many startups.
Panama private interest foundations operate under Law 25 of 1995, offering a trust‐like structure with high confidentiality and no tax on non-Panamanian income. A small council runs the foundation per a private charter, and a protector oversees adherence to the founder’s intent. Formation takes approximately two weeks, and costs are also relatively low, representing a strong choice for projects valuing anonymity.
Lastly, Liechtenstein foundations under the Persons and Companies Act provide robust legal rigor that is ideal for European ventures. A mandatory €30 K endowment and higher admin costs (including audits and a default 12.5% corporate tax) set these apart from traditional ventures. Notwithstanding these increased costs, a Liechtenstein foundation’s ability to codify complex governance and beneficiary rights within an EU-compliant framework (including the EU market rules for crypto, Markets in Crypto-Assets Regulation, or MiCA) appeals to projects needing strong regulatory credibility and a regulated base in Europe.
The U.S. Trade-Off: Certainty, Compliance, and Credibility
Tax considerations often drive founders offshore, but a DUNA’s onshore model trades 100% tax neutrality for legal certainty. By electing to be treated as a U.S. corporation, a DUNA pays the 21% federal income tax rate or opts into applicable non-profit rules, but avoids distributing K1s to token holders, simplifying global reporting, especially for organizations that already have a U.S. nexus and may need to pay U.S. taxes anyways. It can also tap into the U.S. network of tax treaties to reduce withholding burdens for international members. Offshore wrappers like Cayman, BVI, and Panamaall impose zero entity-level tax, and Liechtenstein’s modest 12.5% arises only without a public-benefit exemption. Yet U.S. participants in offshore entities face CFC and foreign trust reporting that can trigger immediate U.S. tax consequences. For many, knowing exactly where and how taxes are paid, even if higher, can outweigh the unpredictable and rapidly evolving nature of offshore compliance.
More significantly, anchoring in the U.S. provides regulatory clarity and institutional credibility. Under a second Trump administration, pro crypto policy rhetoric is intensifying, with promises of a “crypto czar” and a vision of America as the “crypto capital of the planet.” A DUNA is positioned to benefit from any forthcoming sandbox programs, grant initiatives, or streamlined frameworks that favor U.S. entities. Conversely, offshore entities might soon find themselves in a perpetual gray zone, exposed to shifting international rules on transparency, FATF guidelines, or local virtual-asset regulations.
True Decentralization vs. Corporate Oversight
A DUNA’s preeminent selling point is its embrace of native DAO governance. With no mandatory board and bylaws that can directly reference onchain votes, token holders steer decisions in real-time. Offshore foundations (Cayman, Panama, Liechtenstein) operate via a small council or board whose duty is to adhere to the charter; the DAO’s role is advisory, contractually enforced rather than statutory. BVI companies hew to traditional corporate or LLC management, requiring workarounds like multi-sig director appointments or trust‐held shares to approximate decentralization. For DAOs whose raison d’être is pure token voter control, the DUNA presents a compelling option. Offshore solutions can approach decentralization in practice, but they retain a legal “backbone” of trusted human directors or council members—introducing a point of centralization that some communities might find undesirable.
Why a U.S. HQ Makes Sense in 2025
Once viewed as hostile to crypto, the U.S. has signaled a dramatic pivot. Industry leaders anticipate that under the second Trump administration legislation and regulations will tilt pro innovation and aim to enshrine America as the global hub for digital assets. By anchoring a DAO in Wyoming, projects can gain easier access to U.S. capital markets, prospective sandbox programs, and retail and institutional investors. A DUNA also bolsters trust among regulators, banks, and high-net-worth backers who demand transparent legal standing. Moreover, a U.S. entity can directly engage in policy advocacy, shaping rules rather than reacting from the sidelines, representing a critical edge in this developing ecosystem.
Deciding Your Path: DUNA, UNA, or Offshore?
Every DAO must balance its core priorities:
- Public benefit networks ready for true onchain democracy, broad membership, and U.S. legitimacy increasingly consider DUNA, accepting its nonprofit constraints.
- Early-stage teams with fewer than 100 contributors may begin under a UNA or other domestic entity, securing limited liability and onchain governance by contract, then convert to DUNA once thresholds are met.
- Profit-sharing tokens or investment vehicles demand for-profit wrappers like Cayman foundations or BVI companies, which may allow distributions to members, a key feature for a venture looking to raise capital and look to onshore in the U.S. after further regulatory developments are in place.
- Privacy-centric projects that prize anonymity and asset protection frequently favor Panama foundations for relatively minimal disclosure and difficulty of foreign enforcement.
- EU-facing DAOs seeking robust regulatory frameworks and governance codification and clarity may choose Liechtenstein foundations or other EU entity structures, despite the higher cost.
Hybrid models—such as a DUNA for governance frontend and an offshore subsidiary for commercial operations—offer a custom blend but require dual compliance, as well as incur increased costs due to multiple filings and additional legal structuring and compliance expenditure.
In 2025, DAO founders have an unprecedented spectrum of legal vehicles at their disposal. Wyoming’s DUNA offers a bold onramp for decentralized communities, marrying code native governance with U.S. protections. Offshore structures continue to deliver tax neutrality, privacy, and asset protection for specific use cases. Your optimal choice will hinge on community size, profit objectives, governance philosophy, and compliance appetite.
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