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Bill

HB 1796

Corporations; creates a regulatory framework for decentralized autonomous organizations.

2025 Regular Session Introduced by Cliff Hayes and 5 co-sponsors

Virginia would establish legal recognition and regulatory framework for blockchain-based decentralized autonomous organizations, rejected by Governor, then House overrode veto 68-28.

Vetoed by Governor
0
WeVote Research Nonpartisan
Bill Summary · HB 1796

Legislative bill overview

HB 1796 would establish Virginia's first legal framework for Decentralized Autonomous Organizations (DAOs)—entities operated through smart contracts and blockchain technology rather than traditional corporate structures. The bill creates regulatory pathways allowing DAOs to operate as recognized legal entities in Virginia while maintaining their decentralized governance model.

Why is this important

This legislation would position Virginia as a blockchain-friendly jurisdiction, potentially attracting cryptocurrency and Web3 companies. It also addresses a genuine legal gap: DAOs currently operate in regulatory gray zones, creating liability and taxation uncertainties for participants. Clarifying DAO legal status could facilitate billions in decentralized finance activity while establishing consumer protections.

Potential points of contention

  • Consumer protection risks: DAOs lack traditional corporate accountability structures (boards, officers), potentially making fraud detection and investor recourse more difficult
  • Tax administration concerns: Decentralized governance and membership structures complicate income reporting, tax liability assignment, and audit capabilities
  • Regulatory capture: The framework may be too permissive for an emerging technology sector with documented fraud problems, or conversely too restrictive to achieve innovation goals
  • Jurisdictional arbitrage: Liberal DAO rules could attract high-risk financial schemes seeking lenient oversight
  • Practical governance questions: Unclear how contract law, liability, and member rights function in truly decentralized structures where no single entity controls operations

Compiled from official sources — confirm details with the bill’s official record.

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