Proposed Florida DAO Bill

Florida DAO bill

A bill to be entitled

An act relating to decentralized autonomous organizations; creating part IV of ch. 607, F.S., entitled “Decentralized Autonomous Organizations”; creating s. 607.71, F.S.; defining terms; creating s. 607.72, F.S.; authorizing a decentralized autonomous organization (DAO) to incorporate as a corporation or organize as a limited liability company if certain conditions are met; providing for construction; creating s. 607.73, F.S.; providing that a DAO member, participant, smart contract, algorithm, or wallet is not liable for actions, decisions, or liabilities of the DAO; creating s. 607.74, F.S.; authorizing DAOs to raise unlimited amounts of capital, subject to certain limitations and requirements; creating s. 607.75, F.S.; providing for construction; providing an effective date.

Be It Enacted by the Legislature of the State of Florida:

Section 1. Part IV of chapter 607, Florida Statutes, consisting of ss. 607.71-607.75, Florida Statutes, is created and entitled “Decentralized Autonomous Organizations.”

Section 2. Section 607.71, Florida Statutes, is created to read:

607.71 Definitions.—As used in this part, the term:

(1) “Automated transaction” means any transaction executed through computer code without the need for human intervention.

(2) “Decentralized autonomous organization” or “DAO” means an organization composed of at least two or more persons, algorithms, or smart contracts responsible for executing automated transactions from a blockchain smart contract wallet.

(3) “Person” means a natural person or legal entity.

(4) “Smart contract” means self-executing computer code that automates the execution of predefined actions upon meeting specified conditions.

Section 3. Section 607.72, Florida Statutes, is created to read:

607.72 Legal recognition and registration.—

(1) A DAO may incorporate as provided under part I of chapter 607 or organize as a limited liability company under chapter 605 if the articles of incorporation or articles of organization, as applicable, explicitly reference the smart contract that confers DAO participation and governance rights upon its members, participants, smart contracts, algorithms, or wallets.

(2) A DAO’s incorporation or organization as a corporation or limited liability company, respectively, may not be construed to affect the application of s. 607.73.

Section 4. Section 607.73, Florida Statutes, is created to read:

607.73 Liability.—A DAO member, participant, smart contract, algorithm, or wallet is not liable to any other DAO member, participant, smart contract, algorithm, or wallet for the actions, decisions, or liabilities of the DAO.

Section 5. Section 607.74, Florida Statutes, is created to read:

607.74 Raising of capital; reporting requirements.—A DAO may raise unlimited amounts of capital, subject to the following conditions:

(1) The DAO must have a governance structure and use decisionmaking processes that are publicly identifiable and transparent.

(2) The DAO’s activities must primarily relate to the development, maintenance, or support of open-source software.

(3) If the DAO facilitates any financial transactions through traditional financial institutions not using blockchain technology, the DAO must register with the Department of State and file annual financial statements with the department in the same manner as provided in s. 607.1601. Any such financial statements must be made available by the Secretary of State for inspection and copying upon request.

Section 6. Section 607.75, Florida Statutes, is created to read:

607.75 Construction.—In the event of a conflict between state law and the governance procedures of a DAO doing business in this state, the governance procedures of the DAO shall prevail and supersede conflicting laws to the extent of the conflict.

Section 7. This act shall take effect July 1, 2024.

Legal Disclaimer

The information provided in this article is for general informational purposes only and should not be construed as legal or tax advice. The content presented is not intended to be a substitute for professional legal, tax, or financial advice, nor should it be relied upon as such. Readers are encouraged to consult with their own attorney, CPA, and tax advisors to obtain specific guidance and advice tailored to their individual circumstances. No responsibility is assumed for any inaccuracies or errors in the information contained herein, and John Montague and Montague Law expressly disclaim any liability for any actions taken or not taken based on the information provided in this article.

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