Cryptocurrencies like Bitcoin and Ethereum aren’t the only things that can be built on a distributed ledger.
Business pioneers have been exploring a wide range of blockchain use cases — such as settling transactions in financial markets, storing electronic medical records, or making digital advertising more transparent — and lawmakers here in New Hampshire have been hard at work to make the state a go-to destination for innovators.
With an overwhelming 340-33 vote, the New Hampshire House approved a bill this week that Republican Representative John Hunt of Rindge called “the most exciting thing” the Commerce and Consumer Affairs Committee has tackled in years. The measure will “revolutionize” the ways people can create corporations in New Hampshire, he said.
“People are going to want to come here, to come to New Hampshire, to create one of these,” Hunt told the House on Wednesday.
The legislation that earned Hunt’s praises, House Bill 645, would establish a way for decentralized autonomous organizations, or DAOs, to secure legal recognition as business entities. It’s kind of like how the state decided decades ago to recognize and regulate limited liability companies, Hunt said.
But unlike LLCs, these DAOs use so-called “smart contracts” to carry out a project without needing designated directors or officers to serve as central authority figures.
“In contrast to traditional legal entities, which typically involve delegation of authority to centralized management, a DAO allows participants to govern themselves directly over a decentralized computer network,” Representative Keith Ammon explained in the committee’s majority report.
Ammon, a Republican from New Boston, said the bill would enable DAOs to gain clear legal status by registering with the New Hampshire Secretary of State’s Office. That, in turn, would “attract positive economic activity and good jobs to our state,” he said.
The bill has its detractors. Representative Christopher Herbert, a Democrat from Manchester, said lawmakers haven’t been told enough about the crypto-friendly environment that proponents hope to build in New Hampshire. And he noted some big-name investors have been wary of grandiose claims about blockchain-based technologies, particularly after notable incidents of fraud and instability.
Herbert warned about potential harms to consumers and urged lawmakers to refrain from endorsing this system “in any shape or form.”
If this bill passes the Senate and Governor Chris Sununu signs it into law, it would fulfill one of the 12 recommendations the governor’s Commission on Cryptocurrencies and Digital Assets made a year ago.
While several other states — including Vermont, Wyoming, Tennessee, and Utah — have enacted DAO-related laws, the commission in New Hampshire concluded policymakers here have an opportunity to implement a better solution and become “a true hub” for blockchain development and operation.
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