New Hampshire Has a Better Approach to DAOs

The most significant legal risk is that DAO developers, administrators, and participants are subject to joint and several liability for losses realized by a DAO. In contrast, shareholders of corporations (and other legal entities) enjoy “limited liability.” That is, if a corporate shareholder invests $100, the shareholder (in most cases) is only exposed to losing that investment due to corporate activities, and the rest of the shareholder’s assets are protected. This limited liability for shareholders, first adopted for general corporations by New York State in 1811, is a legal innovation that has powered today’s Western economies.

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