Explore the advantages of the US State of Vermont as a jurisdiction for Decentralized Autonomous Organizations (DAOs).


Updated 27th August 2023*

This post is part of our research on DAO-friendly global jurisdictions.

Vermont Blockchain-based Limited Liability Companies

Overview of Jurisdiction:

Vermont's Title 11: Corporations, Partnerships and Associations, Chapter 025: Limited Liability Companies, Subchapter 012: Blockchain-based Limited Liability Companies.

This section establishes the legal basis for the creation of Blockchain-Based Limited Liability Companies (BBLLCs) in Vermont. Notably, it recognizes BBLLCs as a distinct class of limited liability companies that can employ blockchain technology for their governance.

Key components are as follows:

  1. Governance through blockchain: The law permits BBLLCs to use blockchain technology for their governance, partially or entirely.
  2. Operating agreement requirements: The operating agreement for a BBLLC should include:
  • Mission or purpose: A summary description of the BBLLC's mission or purpose should be provided.
  • Blockchain specifics: The agreement must specify the type of blockchain the BBLLC uses, including whether it's fully or partially decentralized, and whether it's fully or partially public or private. The extent of participants’ access to information and read and write permissions with respect to protocols should also be detailed.
  • Voting procedures: The agreement should define voting procedures, including how proposals for software or protocol upgrades, changes to the operating agreement, or other governance matters will be handled. These procedures may include smart contracts.
  • Security protocols: The BBLLC needs to establish protocols for responding to system security breaches or other unauthorized actions affecting the integrity of the blockchain technology it uses.
  • Membership: The agreement should outline how a person becomes a member of the BBLLC, including whether interests will be denominated in units, shares of capital stock, or other forms of ownership or profit interests.
  • Rights and obligations of participants: The operating agreement must specify the rights and obligations of each group of participants within the BBLLC, including which participants are entitled to the rights and obligations of members and managers.

These stipulations form a legal framework that legitimizes the operation of BBLLCs, granting them similar legal protections and recognitions as traditional LLCs while catering to their specific needs related to blockchain technology. However, as with all legal frameworks, this subchapter also comes with its own unique set of implications and potential challenges that should be carefully considered.

Based on the provided excerpt from Vermont's legislation, the requirements for establishing a Blockchain-Based Limited Liability Company (BBLLC), which is an analog to a Decentralized Autonomous Organization (DAO), include:

  1. Mission or Purpose Statement: The operating agreement must provide a summary description of the BBLLC's mission or purpose.
  2. Blockchain Specifics: It should specify the nature of the blockchain being used, whether it's fully or partially decentralized, and whether it's public or private. Information access levels and read and write permissions for participants should also be outlined.
  3. Voting Procedures: The operating agreement must define the voting procedures, which could include the use of smart contracts. This would govern how proposals for upgrades or modifications to software systems or protocols, changes to the operating agreement, and other matters of governance are handled.
  4. Security Protocols: The BBLLC must adopt protocols to respond to system security breaches or other unauthorized actions that affect the integrity of the blockchain technology being used.
  5. Membership: The agreement must state how a person becomes a member of the BBLLC. The interest may be denominated in units, shares of capital stock, or other forms of ownership or profit interests.
  6. Rights and Obligations: The operating agreement should clearly specify the rights and obligations of each group of participants within the BBLLC, including which participants are entitled to the rights and obligations of members and managers.

Regarding the legal protections offered, this Vermont legislation recognizes BBLLCs as a legitimate form of business entity. This recognition provides several legal protections to BBLLCs:

  1. Limited Liability: As with traditional LLCs, BBLLCs offer limited liability to their members. This means that the personal assets of the members are typically not at risk if the BBLLC faces debt or legal issues.
  2. Legal Recognition: BBLLCs are recognized as legal entities, granting them the ability to enter into contracts, sue and be sued, and own property.
  3. Governance Protections: The operating agreement forms a legally binding document that governs the operation of the BBLLC, offering legal protection to members' rights and obligations.
  4. Operational Continuity: Even in the event of a member's death, bankruptcy, or withdrawal, the BBLLC can continue to operate, providing a legal framework for operational continuity.
  5. Dispute Resolution: In the event of disputes among members, the courts can provide a formal mechanism for resolution based on the BBLLC's operating agreement and applicable laws.

Benefits and Challenges:

The legislation regarding Blockchain-Based Limited Liability Companies (BBLLCs) in Vermont, such as the given Subchapter 012 of Title 11, provides a legal framework that brings both benefits and challenges.


  1. Legal Clarity and Recognition: By providing a clear legal framework for BBLLCs, the legislation legitimizes these entities and provides a model for their creation and operation. This gives potential BBLLCs confidence in establishing their operations within the state.
  2. Limited Liability Protection: As their name suggests, BBLLCs offer limited liability protection to their members, similar to traditional LLCs. This means members aren't personally liable for the company's debts or liabilities.
  3. Flexible Governance: The legislation allows BBLLCs to establish flexible governance structures. For example, they can utilize blockchain technology for voting and decision-making processes, allowing for decentralized and democratic governance.
  4. Innovation Encouragement: By legitimizing BBLLCs, Vermont is encouraging innovation and adoption of blockchain technology. This could potentially lead to increased technological development and economic activity in the state.


  1. Technological Complexity: The use of blockchain technology adds a layer of complexity to the operation of BBLLCs. For instance, participants must understand blockchain technology, smart contracts, and digital currencies, which may deter some from participating.
  2. Security Concerns: As BBLLCs rely heavily on blockchain technology, they are susceptible to potential security breaches. While the legislation requires the adoption of security protocols, ensuring effective implementation can be challenging.
  3. Regulatory Uncertainty: Although the legislation provides a framework for BBLLCs, there may be uncertainty regarding how these new types of organizations interact with other areas of law, such as taxation and securities regulation. This uncertainty could pose challenges until further legal clarifications are provided.
  4. Public Perception and Trust: As blockchain technology and BBLLCs are relatively new and complex, gaining the trust of the public and potential participants can be challenging. Misunderstandings or misconceptions about blockchain technology could impact the reputation and acceptance of BBLLCs.

In conclusion, while Vermont's legislation regarding BBLLCs offers significant opportunities for innovation and provides legal recognition and protection for such entities, it also brings challenges that need to be carefully managed. Entities considering forming a BBLLC would need to thoroughly understand these benefits and challenges to make an informed decision.

Case Studies:

There several business which registered as Domestic Blockchain Based Limited Liability Company in Vermont but the official data base denies the access for more information. Here are some examples our research team found:






*Please note that the information in this post is for informational purposes only. It should not be construed as legal, tax, investment or other advice.*

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