Decentralized Autonomous Organizations (DAOs) are a new form of organization where the governance is facilitated by software protocols. DAOs are frequently employed as a vehicle to manage digital assets and transactions in furtherance of a specific objective. New Hampshire is among the first states in the country to establish a legal framework to organize and operate these entities. While a potentially attractive organizational model for digital asset-related businesses seeking to decentralize and automate governance, the legal treatment of DAOs across jurisdictions, federal systems, and regulated industries varies, creating regulatory uncertainties.
DAOs are formed on blockchain networks relying on so-called “smart contracts” to automate their governance and operations. The smart contracts are self-executing sets of rules in software code stored on the blockchain. The smart contracts allow DAO members to vote on the governance and transactions taken by the DAO and are visible to all members. Then, smart contracts automatically enforce decisions, such as recording or carrying out the voting outcomes of DAO members, without the need for intermediary involvement. Persons generally become a member of a DAO through purchasing the DAO’s token.
DOAs may seek legal entity status under a jurisdiction that recognizes DAOs as an alternative to a purely contractual agreement among members. DAO-specific legislation across the country is still in the early adoption phase, with a handful of states, including NH, establishing tailored statutes. The New Hampshire DAO Act setting forth a framework for the establishment, registration, and operation of DAOs in the state, was enacted in 2024 and took effect in July 2025. To date, the New Hampshire Secretary of State has issued a request for proposals for the development, implementation, and administration of a New Hampshire DAO registry.
The proposed registry is to be a secure, blockchain platform to register and maintain records of DAOs in accordance with the Act. The registry is to be built on a permissionless and open-to-the-public free and open source software blockchain where participation does not rely on the approval or permission from a central authority. Purportedly, the registry will allow the New Hampshire Secretary of State to accept registrations and annual fees and permit deregistration. The proposed registry should allow data sharing with the current New Hampshire Secretary of State business registry “Quickstart.”
Proponents of DAOs present the DAO structure as a means of reducing reliance on centralized leadership, increasing transparency, and enabling more diverse and democratic participation in decision-making. Unlike traditional legal entities, which typically centralize executive authority in officers or agents, DAOs do not have a central authority; instead, DAOs are governed commonly by the members. This structure may allow for more inclusive participation, reduced administrative overhead, and enhanced trust among stakeholders. As businesses explore new ways to increase efficiency, accountability, and community engagement, DAOs may offer a compelling alternative to conventional corporate models, particularly in digital-native environments.
On the other hand, questions remain around the legal status, taxation, practicality, and scalability of DAOs. While aimed at promoting transparency and large-scale involvement, larger token holders could exert disproportionate influence and voter participation is frequently unpredictable, raising accountability concerns. The uncertainty surrounding legal status and regulatory framework may also hinder broader adoption in conventional business environments.
The emergence of DAOs represents a new model for organizational governance with a number of potential benefits, such as broader involvement, transparency, and automation. New Hampshire’s DAO Act is one of the earliest legal frameworks for such entities, laying out a pathway for legal adoption. However, the development remains in its early stages. As practical challenges and legal uncertainties remain, businesses exploring the potential of DAOs should closely monitor regulatory development in the state and nationwide.