H 7843Technology

Corporations, Associations, and Partnerships - Rhode Island Decentralized Autonomous Organization Act

This bill allows digital organizations governed by blockchain code to legally register as limited liability companies in Rhode Island.

Held for study

Population
Affected

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Introduced Feb 27, 2026Committee House Corporations

Plain-English Summary

This bill allows Decentralized Autonomous Organizations (DAOs) to register as Limited Liability Companies (LLCs) in Rhode Island. DAOs are groups governed by computer code and blockchain technology rather than traditional managers. Under this legislation, these digital organizations can become legal businesses if they file specific paperwork, appoint a registered agent, and report to the Department of Business Regulation. The bill limits the financial liability of the members, provided no fraud occurs. It also creates a "regulatory sandbox" to allow these groups to test projects under state supervision while requiring compliance with laws regarding financial crimes.

For younger readers

Imagine a club run by a computer program instead of a boss. This bill lets those computer clubs, called DAOs, become official businesses in Rhode Island. By doing this, the people in the club won't lose their own money if the business has problems, unless they do something very bad on purpose. They have to follow safety rules and tell the government how they are running things. The bill also creates a special testing zone where they can try out new ideas while the government watches to make sure everything is safe.

Who & Where It Applies

Impacted groups

Blockchain developersCryptocurrency investorsEntrepreneursDepartment of Business RegulationFinancial institutions

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

Amount unknown

Estimated revenue

Amount unknown

Bill Analysis

Both viewpoints

For Progressives

Encourages technological innovation and economic development within the state, potentially creating high-skill jobs in the emerging blockchain sector.
Mandates compliance with anti-money laundering and financial crime laws, ensuring that these new digital entities cannot easily bypass regulations designed to protect the financial system.
Establishes a "regulatory sandbox" that allows for government oversight and public-private collaboration, potentially leading to more transparent infrastructure projects managed via blockchain.
Promotes the expansion of blockchain and cryptocurrency technologies, which often have a significant environmental footprint due to high energy consumption.
May facilitate financial speculation and risky investment vehicles that could harm inexperienced retail investors despite the stated compliance requirements.
Granting LLC status to code-governed entities could make it difficult to hold specific human individuals accountable for corporate malfeasance or systemic failures.

For Conservatives

Promotes economic freedom by legally recognizing a new, decentralized business structure, allowing entrepreneurs to operate without traditional corporate hierarchies.
Attracts investment and capital formation to Rhode Island by creating a friendly legal environment for blockchain technology and private placements.
Limits the personal liability of members, protecting individual investors and participants from financial ruin due to business failures.
Imposes significant government oversight through the Department of Business Regulation, including mandatory annual reporting and the power to issue guidance on operations.
Mandates strict compliance with federal regulations like "Know-Your-Customer" and FinCEN obligations, which some may view as an invasion of financial privacy.
Grants the state broad regulatory authority to promulgate rules and oversee the "regulatory sandbox," potentially leading to bureaucratic creep and stifling true decentralization.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 44 additions

SECTION 1. Title 7 of the General Laws entitled "CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS" is hereby amended by adding thereto the following chapter: 7-17-1. Purpose and recognition.

(a) By adopting this legislation, Rhode Island can compete effectively for blockchain talent and investment, drive economic growth in emerging tech sectors, and open new avenues for projects, financing and public-private collaboration while upholding strong oversight, cybersecurity protections, and full federal compliance.

(b) A decentralized autonomous organization may be recognized as a limited liability company under Rhode Island law when it satisfies the governance and reporting requirements established in this chapter. 7-17-2. Articles of organization. A decentralized autonomous organization limited liability company shall include in its articles of organization a declaration that it is a decentralized autonomous organization limited liability company, the address of the on-chain governance contract or protocol, the name and address of a registered agent for service of process in Rhode Island, and provisions that specify member’s rights, voting thresholds, and procedures for amendments. 7-17-3. Governance and liability. Governance may occur through smart contracts or digital consensus mechanisms. Member liability is limited to the amount of each member’s financial contribution unless fraud or willful misconduct is proven. A decentralized autonomous organization limited liability company may sue and be sued in its own name. 7-17-4. Reporting and oversight. Decentralized autonomous organization limited liability companies shall file an annual report with the department of business regulation (” the department”) that discloses the status of governance and any technical modifications. The department shall issue guidance on filing procedures and review processes, and cybersecurity standards consistent with regard to compliance with any laws pertaining to Rhode Island financial institutions cybersecurity law. 7-17-5. Regulatory sandbox. The state shall establish a limited-term regulatory sandbox that permits decentralized autonomous organization entities to pilot public and private projects, including infrastructure and financing initiatives, under department oversight. Participants shall maintain compliance with anti- money laundering, know-your-customer, and Financial Crimes Enforcement Network (FinCEN) obligations. 7-17-6. Dissolution and conversion. A decentralized autonomous organization limited liability company may convert to a traditional limited liability company or dissolve through a member vote recorded on-chain or by written consent filed with the secretary of state. 7-17-7. Capital formation and project finance. A decentralized autonomous organization limited liability company may engage in capital formation through private placements of membership interests or governance tokens that comply with federal securities laws, including Regulation D (private placements), and may finance infrastructure projects, public-private partnerships, and other lawful initiatives through transparent on-chain mechanisms, subject to all applicable state and federal regulatory requirements. 7-17-7. Rules and Regulations. The department of business regulation shall promulgate rule and regulations relating to the implementation and enforcement of this chapter.

SECTION 2. This act shall take effect upon passage.