Federal crypto legislation is moving fast. In just the past three months, President Trump signed into law the “Guiding and Establishing National Innovation for U.S. Stablecoins” (GENIUS) Act, and the House of Representatives advanced the landmark “Digital Asset Market Clarity” (CLARITY) Act with overwhelming bipartisan support.
But the federal government is not the only U.S. lawmaking body seeking to establish rules of the road for the crypto industry. In 2024, 27 states and Washington D.C. passed 57 crypto-related bills.
While federal legislation — with its focus on protecting consumers, providing regulatory clarity, and fostering innovation — significantly reduces, or even altogether eliminates, the need for states to implement their own comprehensive crypto regimes, states can continue to play a positive role in promoting responsible crypto innovation.
In what follows, we break down five targeted, proactive measures — grounded in real-world examples — that states can take to safeguard their citizens and support local blockchain businesses.
#1: Adopt the DUNA
Unlike corporations, decentralized blockchain networks don’t have Boards of Directors or CEOs. Instead, they aim to eliminate centralized mechanisms of control by putting governance in the hands of users through a decentralized autonomous organization, or DAO (pronounced “dow”).
Without DAOs, blockchains risk being co-opted by the same centralizing forces that have resulted in today’s internet feudalism; governance by a few kings: the reign of Meta, Google, Amazon, and the like. These centralized, extractive corporations aren’t good for users or innovation. If big tech ends up owning blockchain networks, then a blockchain-based internet (sometimes known as “web3”) will likely reproduce the same problems that already plague cyberspace: surveillance, cybercrime, censorship, value extraction — the list goes on.
By empowering users to govern blockchain networks, DAOs can help realize the original promise of the internet: open, decentralized, user-controlled. But DAOs today confront a host of challenges. Recently, some have even become the target of legal and regulatory actions. Just last year a court ruled that any participation in DAOs (including posting in an open forum) could result in its members being made liable for the actions of others under the laws of general partnerships. This creates significant legal liability for DAO members, and generally undermines the viability of the form. DAOs also confront more everyday — but still harmful — roadblocks, such as an inability to contract with third parties.
Thankfully, a solution to these problems already exists. In March 2024, Wyoming became the first state in the country to enact the Decentralized Unincorporated Nonprofit Association Act, or DUNA. The DUNA allows blockchain networks to remain decentralized while complying with the law. The DUNA grants DAOs legal existence, allows them to contract with third parties and appear in court, enables them to pay taxes, and provides them with key protections from the actions of members. In short, the DUNA puts DAOs on equal footing with other corporate forms, such as the LLC.
The DUNA is gathering speed. Just last month, Uniswap DAO (the governing body of the much-used decentralized finance protocol of the same name) voted resoundingly (52,968,177 for, 0 against) to adopt a Wyoming-registered DUNA as the legal structure for the Uniswap Governance Protocol. The DUNA will enable Uniswap to preserve its decentralized governance structure while allowing it to retain service providers, fulfill regulatory requirements, and more. Newly launched projects are similarly using the structure.
The more widespread the DUNA becomes, the better equipped DAOs will be to outcompete corporate networks and help create an open, user-controlled internet. Wyoming’s trailblazing DUNA law built upon years of work, including the state’s adoption of the unincorporated nonprofit association (UNA) statute. Other states with functional UNA frameworks can unlock the potential of web3 by adopting the DUNA themselves. Collectively, this can help accelerate the end of crypto offshoring and solidify the U.S.’ status as the crypto capital of the world.
#2: Ensure that existing laws don’t misclassify, and thus mistreat, tokens
Tokens are data records that index information like quantities and permissions. What makes them different from ordinary digital records is that, because they exist on decentralized blockchains, they can only be altered according to a predetermined set of rules. Since these rules are executed using autonomous software that no party controls, tokens can be used to grant their holders enforceable digital property rights.
Although we’ve classified them into seven categories, token use-cases are endless. And — despite the common misconception that a token is just a memecoin for trading or something like bitcoin — many common token types are not financial in nature. Take, for example, arcade tokens. As their name suggests, arcade tokens are like the old metal coins you’d get at an arcade. They provide utility within a system, like a game, and are not intended for speculation or investment. Typical examples of these tokens are digital gold in a virtual world and loyalty points in a membership program.
Blackbird, for example, is a restaurant loyalty app that gives points to customers and revenue to restaurants. Its arcade token, FLY, is used to fuel engagement between a restaurant and its customer. Customers can, for instance, use FLY to buy a cold brew and earn loyalty rewards. In this way, FLY creates an opportunity for your local coffee shop or neighborhood pizzeria to retain their customers, while rewarding people for patronizing small businesses.
Like arcade tokens, collectible tokens are also not financial instruments. Often called “non-fungible tokens” or NFTs, these tokens derive their utility from being a record of ownership of a good or a right. A collectible token might reflect ownership of a song, a concert ticket, or any unique item or permission.
Obviously, restaurant loyalty points and songs aren’t financial instruments like shares of a company or corporate bonds; neither arcade nor collectible tokens offer, promise, or imply financial returns. And examples of other non-speculative tokens abound, from identity credentials to in-game assets and more.
So when it comes to arcade tokens, collectible tokens, and other non-speculative digital assets, it is critical that they are not confused with financial instruments. Yet too often we see states using a single term, like “financial asset” to refer to all tokens. The unfortunate upshot is that individuals and businesses using tokens that aren’t financial in nature become subject to rules intended for financial institutions.
And laws that misclassify tokens — or worse, that try to use a single definition to categorize all tokens — invariably mistreat them. The consequences can be baffling.
Imagine if a coffee shop owner had to seek a financial services license to offer a loyalty program to his customers. Or a musician had to contact her local financial regulator to ask for permission to publish a token representing ownership of her new single. Such requirements burden small businesses, artists, and users, and aren’t necessary to protect consumers. Crypto needs good policy and regulation to thrive, and achieving that requires rules that address real risks, not ones that hamstring precisely the businesses and creators that fuel a state’s growth and ingenuity.
An example of a state law that appropriately treats tokens is the Illinois Digital Assets and Consumer Protection Act (DACPA), which Governor Pritzker signed into law in August of 2025. Recognizing that different tokens pose different risks, the DACPA includes carve outs from financial regulation for businesses using arcade tokens, collectible tokens, and other tokens that aren’t used for financial speculation, and therefore don’t pose the risks that this regime is intended to address. Other states should follow Illinois’ lead by ensuring that laws appropriately classify — and treat — tokens.
#3: Launch a blockchain task force
Too often conflicting state laws result in a patchwork of contradictory rules that entrench big businesses — who have the resources to comply — at the expense of little tech. Fortunately, federal legislation largely eliminates the need for each state to develop its own comprehensive crypto framework. But for certain issues, states ought to remain, to borrow a metaphor from Justice Louis D. Brandeis, “laboratories” for policy innovation.
In determining whether and how a state should experiment, a good first step is to establish a blockchain task force. Task forces provide states with a valuable mechanism for public-private information sharing. Composed of individuals from both the government and industry, task forces can equip governors and legislatures with information about blockchain technology, its use-cases, benefits, risks, and the impact of federal policymaking on the state’s policy agenda — and also how the state might harmonize its policies with those of other states.
A good example of a state crypto task force is the California Blockchain Working Group. In 2018, California rolled out AB 2658, which required the Secretary of the Government Operations Agency to appoint a blockchain technology working group and chairperson tasked with evaluating blockchain uses, challenges, opportunities, legal implications, and more.
This 20-person panel represented multiple disciplines, including experts in technology, business, government, law, and information security. Two years later, the group issued a report to the legislature with its policy recommendations, as well as proposals for how to adapt existing laws to the particular needs of blockchains.
#4: Pilot public sector blockchain use-cases
States can also advance responsible crypto innovation — and solve real-world problems — by testing blockchain applications in the public sector. These pilots serve two purposes: They promote education around the technology’s wide-ranging utility, and they demonstrate tangible benefits for government operations. Public sector blockchain programs can yield benefits that go beyond any single pilot. By learning through doing, state agencies uplevel their own knowledge of the technology, and can then use that understanding to inform the development of state policies.
Good examples of public sector blockchain implementations already exist. The California Working Group’s report wasn’t just academic; its findings led to state-level pilots, like the DMV’s initiative to digitize car titles on a blockchain to reduce fraud and increase efficiency. Utah enacted a law directing the state’s Division of Technology Services to pilot blockchain-based credentials for public sector programs. Other use-cases include mobile blockchain-based voting for overseas voters, publishing state expenditures to a public blockchain to increase transparency, and using verifiable health credentials to communicate medical test results in a privacy-preserving manner.
By piloting — and scaling up — these applications, states can better understand blockchain use-cases while delivering benefits to citizens in the form of improved government services.
#5: Use stablecoins and develop a state issuance regime in line with GENIUS
Stablecoins represent a credible opportunity to onboard a billion people into crypto. Around the world, they will enable faster, cheaper, programmable payments.
States can benefit from the digital dollar too. Stablecoins can help enhance government procurement and disbursement processes by making these programs less expensive, more efficient, and more easily auditable. Provided states leverage privacy-preserving approaches to ensure that their citizens’ data is protected, these programs can be a boon for governments and residents alike.
In addition to using stablecoins to enhance government programs, states can also engage in the development of stablecoin-issuance regimes that are calibrated to their local needs: While GENIUS sets national rules for payment stablecoin issuers, it also preserves a state licensing pathway for issuers — provided those issuers have an outstanding issuance under $10 billion, and as long as the state’s regime is substantially similar to the federal framework.
Determining exactly what “substantially similar” means will take some time. GENIUS, which passed both the Senate and House of Representatives with broad bipartisan support, sets a high bar for stablecoin issuers, imposing asset backing and transparency requirements, establishing robust requirements for anti-money laundering and know-your-customer compliance, and more. The law does not go into effect until January 2027, or four months after the primary federal stablecoin regulators issue final regulations (whichever comes first). In the interim, federal agencies will work out the details of GENIUS, including what a state regime requires to meet or exceed this federal standard. While the federal government implements GENIUS, states can begin exploring whether there is a need for adapting, or advancing, local stablecoin legislation.
GENIUS is clear that states must satisfy the federal framework’s requirements to regulate stablecoin issuers, but the law allows local governments to engage in policymaking that will help shape the future of the digital dollar.
Stablecoins represent another opportunity for states to be “laboratories,” experimenting with the development of different stablecoin-issuance regimes that meet their local needs. States like California have already enacted stablecoin legislation. Wyoming has even launched its own stablecoin, the Frontier Stable Token.
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As federal crypto rules come online, states may no longer need to build comprehensive crypto regimes of their own. Yet they still have an important role to play: By pursuing targeted, practical measures, states can help drive responsible crypto innovation while ensuring that their citizens and local businesses share in the benefits of the future of the internet.
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Aiden Slavin is Policy Partner at a16z crypto. Prior to joining a16z, he led web3 policy initiatives at the World Economic Forum. Before that, he managed the development of policy frameworks and governance standards related to decentralized ID. Aiden received his MSc from the University of Oxford, and his BA from Columbia University.
Kevin McKinley is a Partner on the a16z Government Affairs team, where he leads the firms’ engagement in state and local policy. Before joining Andreessen Horowitz, Kevin was a Public Policy Director on the U.S. State & Local Policy Team at Meta, where he managed California legislation and supported advocacy initiatives nationwide. He previously led California advocacy for the Internet Association, and focused on privacy and technology policy at the California Chamber of Commerce. Kevin began his career as a litigator, handling both civil and criminal cases.
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