Corporations; creates a regulatory framework for decentralized autonomous organizations.
HB1796 directs the Joint Commission on Technology and Science, working with the State Corporation Commission, to study decentralized autonomous organizations (DAOs) in Virginia and report recommendations by December 1, 2025. The study is intended to examine how DAOs would function under Virginia law and whether they can fit within existing business entities such as limited liability companies. It also requires review of the legal and economic effects of DAOs, including governance structure, consumer protection, fraud risk, financial-market impacts, taxation, and how other states and jurisdictions are regulating similar entities.
Rather than immediately creating a full regulatory regime, the bill is a study measure that gathers input from blockchain and financial-regulation experts, the Virginia Bar Association, the Attorney General’s Office, and consumer advocates. The bill’s purpose is to inform future legislation on whether and how Virginia should recognize or regulate DAOs, which are blockchain-based organizations that can operate through smart contracts and decentralized governance.
The bill does not directly amend existing corporate statutes or create a new DAO legal framework; instead, it authorizes a formal policy study that could lead to future changes in Virginia’s corporation, securities, consumer protection, and tax laws. It requires state entities to evaluate whether DAOs are compatible with current business forms and what regulatory gaps may exist, potentially influencing later legislation affecting LLCs, digital assets, and blockchain-based governance structures.
Overall sentiment appears generally favorable toward exploring the issue, as reflected by strong committee and House support and the Senate’s eventual passage of the measure with amendments. The bill advanced through multiple committees and chambers, suggesting broad interest in understanding DAOs and their implications, even though the Senate initially defeated it before reconsidering and approving it. The Governor’s recommendation was later rejected by the House, indicating some disagreement over the final form or scope of the proposal, but not necessarily over the underlying need for study.
The main point of contention appears to be whether Virginia should move beyond study and toward a more concrete regulatory framework for DAOs, as suggested by the bill caption, versus limiting the measure to a fact-finding report. The Senate’s narrow 20-19 passage, along with prior defeats and reconsideration, indicates some division over the bill’s necessity or direction. Concerns likely centered on consumer protection, fraud and governance risks, taxation, and the uncertainty of fitting DAOs into existing corporate law, while supporters emphasized the need to assess emerging blockchain technology before adopting substantive regulation.