DAOs in Switzerland: Legal Structures, Swiss Verein, and Crypto Valley's DAO Ecosystem

DAOs in Switzerland: Legal Structures, Swiss Verein, and Crypto Valley’s DAO Ecosystem

The decentralised autonomous organisation — the DAO — is the native governance structure of Web3. It is also, from a legal standpoint, one of the most challenging constructs that twenty-first century commercial law has encountered. DAOs govern protocols controlling tens of billions of dollars in assets, make decisions affecting hundreds of thousands of token holders across dozens of jurisdictions, and execute those decisions through smart contracts on public blockchains. And in most legal systems, they do not exist.

Switzerland — and specifically Zug’s Crypto Valley — has emerged as one of the few jurisdictions to develop coherent legal infrastructure for DAOs. The Swiss Verein (association), a centuries-old legal form under the Swiss Civil Code, has proven surprisingly well-suited to the DAO governance model. Understanding why requires first understanding what makes DAOs legally intractable everywhere else.

What Is a DAO?

A decentralised autonomous organisation is an entity governed by rules encoded in smart contracts on a blockchain, where governance decisions are made by token holders voting on-chain. The canonical DAO structure works as follows:

• A governance token (e.g., UNI for Uniswap, MKR for MakerDAO, AAVE for Aave) is distributed to users, investors, and contributors.
• Token holders propose and vote on governance decisions: changing protocol parameters, allocating treasury funds, upgrading smart contracts, or modifying governance rules.
• Votes are counted on-chain or via off-chain snapshot with on-chain execution.
• Proposals that meet the quorum and approval threshold are automatically executed by the smart contract — or, in some implementations, queued for execution by a multisig guardian that implements the outcome of the governance vote.

The “autonomous” in DAO refers to this automatic execution: once a governance vote passes, no individual human needs to act — the smart contract executes the decision. The “decentralised” refers to the distribution of governance power across token holders, in contrast to hierarchical organisations where authority is concentrated in management or a board.

The concept was first articulated in the early Ethereum community, and the first major DAO — simply called “The DAO” — launched on Ethereum in April 2016. The DAO raised approximately USD 150 million in ETH before being exploited through a reentrancy vulnerability in June 2016, resulting in the controversial Ethereum hard fork that created Ethereum and Ethereum Classic.

The Core Legal Problem: Unlimited Liability

The fundamental legal problem with DAOs is straightforward: in most jurisdictions, a DAO has no legal personality. It is not a corporation, partnership, trust, or any other recognised legal entity. This has severe consequences:

Unlimited Personal Liability: If a DAO is treated as a general partnership — the default characterisation in many common law jurisdictions when a group of people act together for a common purpose — every token holder who votes or participates in governance may be personally liable for the DAO’s obligations. If the DAO is sued, or if it causes harm to a third party, every governance participant could face unlimited personal liability.

No Contracting Capacity: A DAO without legal personality cannot enter into contracts, open bank accounts, employ people, hold intellectual property, or engage in regulated commercial activities. This severely limits what DAOs can do beyond their on-chain operations.

Regulatory Uncertainty: DAOs that operate financial services — lending, borrowing, trading, managing assets — without legal personality and without regulatory authorisation face potential enforcement action in every jurisdiction where their users are located.

Treasury Risk: DAO treasuries (often worth hundreds of millions of dollars in protocol tokens and stablecoins) exist on-chain without a legal owner. Without a legal wrapper, there is no entity to hold treasury assets, make investment decisions, or engage with traditional financial institutions.

Swiss Solutions: Three Legal Structures for DAOs

Switzerland offers three primary legal structures for addressing these challenges, each suited to different DAO types and governance models.

1. The Swiss Verein (Association): The DAO Wrapper

The Swiss Verein — the Swiss Civil Code’s form for non-profit associations — is, structurally, a surprisingly natural fit for DAO governance. Under Swiss law (Art. 60-79 of the Swiss Civil Code), a Verein:

• Has legal personality from the moment it is constituted (no registration required, though registration with the commercial register is advisable for certainty);
• Requires at least two members;
• Has no minimum capital requirement;
• Is governed by its statutes, which define membership criteria, voting rights, and governance procedures;
• Can be organised democratically, with member voting as the primary governance mechanism;
• Can hold assets, enter contracts, employ people, and be sued in its own name.

The Verein’s democratic governance structure aligns naturally with DAO token governance. A DAO can constitute itself as a Swiss Verein, with its statutes providing that: (a) membership is determined by holding the DAO’s governance token above a threshold; (b) governance decisions are made by token holder votes conducted via the DAO’s smart contracts; and (c) the Verein’s legal officers (Vorstand, the board) are obligated to implement governance decisions made by the token holder vote.

This structure gives the DAO legal personality while preserving the decentralised governance mechanism. The Verein is the on-chain DAO’s legal face: it can contract with service providers, hold fiat-denominated assets in Swiss bank accounts, employ a legal entity for operational activities, and defend or prosecute legal claims.

The Swiss Verein model has been adopted by several prominent Web3 projects. The Swiss DAO legal ecosystem — including specialist law firms such as MME Legal, Python, and others active in Zug — has developed standard Verein articles for DAO wrappers, addressing the specific challenges of mapping token holder governance onto Swiss association law.

The model has limitations. Swiss association law was designed for traditional civil society organisations — sports clubs, professional associations, charities. Adapting it for a globally distributed DAO with pseudonymous members and billions in on-chain governance creates genuine tensions with Swiss law’s expectations of identifiable, resident membership. Swiss DAO law practitioners navigate these tensions through careful statutory drafting.

2. The Swiss Stiftung (Foundation): Protocol Governance

The Swiss Stiftung (foundation) is not a DAO wrapper in the same sense as the Verein — it has no members, and governance is conducted by a foundation council rather than by democratic vote. But for protocol governance foundations — entities that hold a protocol’s intellectual property, treasury assets, and regulatory relationships — the Stiftung is arguably the superior structure.

Stiftungen used for Web3 protocols (the Ethereum Foundation, Web3 Foundation, Cardano Foundation, Tezos Foundation) are designed for a specific purpose: holding protocol assets and serving a mission (supporting the protocol’s ecosystem) without being controlled by any specific group of economic stakeholders. The Stiftung’s mission-locked structure prevents any acquirer, token whale, or regulatory actor from repurposing the foundation’s assets for non-mission purposes.

The Stiftung’s lack of member voting means it is not, strictly speaking, a DAO wrapper — decisions are made by the foundation council, not token holders. But in practice, major protocol foundations operate alongside their DAO governance systems: the foundation holds assets and executes off-chain activities, while the DAO governs on-chain parameters.

3. Swiss GmbH/AG: Operational Entities

Many DAOs structure their operational activities through a Swiss GmbH (limited liability company) or AG (public limited company) — a conventional commercial entity that employs staff, contracts with service providers, manages payroll, and operates regulated activities. The GmbH/AG sits below the Verein or foundation in the legal structure, operating as the DAO’s commercial arm while the governance entity maintains the mission and treasury.

The Zug “Crypto Valley” Environment

Zug’s status as Switzerland’s most welcoming canton for Web3 entities reflects several advantages:

• FINMA Engagement: Swiss financial regulators, particularly FINMA, have demonstrated willingness to engage with novel blockchain structures. FINMA’s 2018 ICO guidance established a framework for token classification that remains among the most sophisticated produced by any financial regulator.
• Existing Ecosystem: The presence of hundreds of crypto-native foundations, law firms, accounting firms, and service providers creates an ecosystem effect. DAO legal counsel is available with genuine expertise in the specific challenges of decentralised governance.
• Commercial Register: Zug’s commercial register has experience processing blockchain-related entity filings. Foundation governance documents referencing smart contracts and token holder votes are less likely to face administrative confusion in Zug than in many other jurisdictions.
• Tax Treatment: Zug’s cantonal tax rates are among Switzerland’s most competitive, and Swiss tax treatment of non-profit foundations is favourable for protocol treasuries that do not distribute profits.

International Comparison: Wyoming DAO LLC and Marshall Islands

Wyoming DAO LLC (2021)

In July 2021, Wyoming became the first US state to enact legislation recognising DAOs as a distinct legal entity: the DAO LLC. Under Wyoming’s Decentralised Autonomous Organisation Supplement (W.S. 17-31), a DAO can organise as a Wyoming LLC with governance conducted through its smart contract code. The DAO’s operating agreement can be “algorithmically determined” — i.e., the smart contract is the operating agreement.

Wyoming DAOs offer limited liability protection to members, US legal personality, and relatively simple formation requirements. However, they face constraints: US tax treatment of LLCs can be complex for globally distributed DAOs, US financial regulations apply to DAO activities, and Wyoming DAO LLCs must be registered with the Secretary of State, creating a public record of member information that conflicts with pseudonymous DAO governance.

Marshall Islands DAO LLC

The Republic of the Marshall Islands enacted DAO LLC legislation in 2022, enabling DAO formation under Marshall Islands law. The Marshall Islands structure is popular with DeFi projects seeking an offshore jurisdiction with DAO-specific legislation, US dollar economy, and low regulatory burden. Several prominent DeFi protocols have formed Marshall Islands DAO LLCs.

The structure’s limitations include limited legal infrastructure (few courts, limited legal precedent), banking access challenges, and regulatory uncertainty regarding US treatment of Marshall Islands entities with US-nexus activities.

The Swiss structures remain competitive with these alternatives for protocols with Zug-based foundations and significant European regulatory interaction, where Swiss law’s stability and FINMA’s established regulatory framework offer genuine advantages.

FINMA and DAOs: Regulatory Engagement

FINMA has not issued specific guidance on DAO legal structures, but its broader token classification framework and its engagement with DeFi have implications for DAO governance:

Regulated Activities: If a DAO conducts activities that constitute regulated financial services under Swiss law — accepting deposits, engaging in securities trading, managing collective investment schemes — it requires licensing regardless of its decentralised governance structure. FINMA applies Swiss financial market law to economic substance, not legal form. A DAO that operates an unlicensed exchange is subject to Swiss financial market law if its activities have a Swiss nexus.

AML Obligations: DAOs that operate financial services may be subject to Swiss Anti-Money Laundering Act (AMLA) obligations, including KYC/AML requirements for users. Reconciling AMLA’s individual identification requirements with pseudonymous DAO participation is an ongoing challenge.

Token Governance: FINMA’s token classification framework classifies governance tokens (like UNI, MKR, AAVE) as utility tokens in most circumstances, meaning they are not treated as securities subject to FINMA’s capital markets regulation. However, governance tokens that also carry economic rights (profit-sharing, asset claims) may be classified as asset tokens — securities — triggering licensing and disclosure requirements.

The Swiss DAO Legal Ecosystem

Crypto Valley has developed specialist legal infrastructure for DAO formation and governance:

• MME Legal (Zurich and Zug): Among the most established law firms for blockchain-related legal work in Switzerland, with extensive DAO structuring experience.
• Python law firm (Geneva and Zurich): Known for financial market law and blockchain advisory.
• Lenz & Staehelin: A major Swiss commercial firm with a blockchain practice group covering DAO structures and FINMA engagement.
• Kellerhals Carrard: Active in digital assets and DeFi legal advice for Swiss-based protocols.

Beyond law firms, the DAO legal ecosystem includes specialised service providers for foundation management, corporate secretarial services for DAO-adjacent entities, Swiss banking relationships for DAO treasuries (notably AMINA Bank and Sygnum Bank, both FINMA-licensed digital asset banks), and accounting firms with experience auditing DAO-adjacent structures.

The legal infrastructure for DAO governance in Switzerland is not complete — the law has not caught up with the technology, and genuine uncertainty remains in areas including pseudonymous membership, cross-border enforcement of DAO governance decisions, and the interaction between on-chain governance and Swiss company law. But Crypto Valley’s Verein-based DAO model remains among the most practically workable approaches available to protocol teams who need legal personality for their governance structures without sacrificing the on-chain governance mechanics that define the DAO model.

Related Coverage

• DeFi Governance: How Aave and Compound Run Billion-Dollar Protocols Through Token Voting
• Web3 Regulation in Switzerland: FINMA, the DLT Act, and MiCA Interaction
• DAO (Decentralised Autonomous Organisation): Definition and Types
• Ethereum: The Web3 Foundation and Zug’s Protocol Anchor
• Polkadot: Zug’s Interoperability Protocol and the Web3 Relay Chain

Author: Donovan Vanderbilt | The Vanderbilt Portfolio AG, Zurich Published: 24 February 2026