Haney’s AB 1229 will create new business structures that will allow California to regulate and tax web3 and blockchain organizations forming in the state
- Nate Allbee
- (415) 756-0561
SAN FRANCISCO — Assemblymember Matt Haney (D-San Francisco) has announced new legislation that would create California’s first legal framework for organizations that use blockchain or other technologies to create Decentralized Autonomous Organizations (DAOs)—which are a cornerstone of the crypto movement.
Tech experts forecast that within the next decade, blockchain technology—also referred to as web3—will be essential to most tech companies and will be integrated into almost all industries. Because of a lack of legal clarity and opaque U.S. regulations, many new DAOs are increasingly incorporating offshore.
AB 1229 creates a new legal framework to regulate, tax, and legitimize DAOs in California and sends a strong signal that California intends to stay at the forefront of the innovation economy.
“We are entering the next era of the internet,” said Assemblymember Haney, the author of the bill. “Whatever you call this new technology—blockchain, web3, or crypto—we know that it’s the future of tech. It would be devastating to both our economy, and our identity as a state, to lose California’s place as the world’s tech leader because our laws are not keeping up with the times.”
Assembly Bill 1229 makes changes to the state’s corporations code by updating the California Unincorporated Association law for technology enabled DAOs, blockchain networks, and smart contract protocols. Allowing DAOs to incorporate in California, pay taxes, and operate within proper legal parameters will ensure better protections for Californians participating in the crypto and web3 economy, while encouraging the formation of legitimate businesses and enterprises.
“Web3 is about building the next generation of the internet, which will give users control over their data, their creative works, and their innovations,” said Miles Jennings, General Counsel at a16z crypto. “The lack of clear regulation in California is holding back this next generation of tech and sending it to other states, and abroad. This legislation is an important step forward in making sure California maintains its status as a leader in technology.”
“It’s actually pretty simple. If we want to continue to be on the cutting edge of technology, then entrepreneurs will need more clarity on DAOs,” said Haney. “This bill creates a clear framework that will encourage them to set up shop, grow, and continue to innovate in California, which is good for the whole state.”
“California has historically been at the forefront of technological innovation,” said Sheila Warren, CEO of the Crypto Council for Innovation. “An established framework for decentralized autonomous organizations is a crucial building block for the future of our digital economy. DAOs empower users and creators. Importantly, they enable user-centered systems that give people control over their data. This bill reflects California’s approach to furthering responsible innovation, rather than trying to stop it.”