DAOs for investment clubs can be set up as compliant, auditable LLCs with onchain governance that your finance team can actually sign off on. This post shows the exact legal wrappers and Solidity stack we use to ship in 90 days—with SOC 2-ready evidence for procurement and measurable ROI.

DAOs for Investment Clubs: Legal Wrappers and Code

Enterprise (family offices, venture platforms, corporate venture, asset managers). Keywords embedded: SOC 2, procurement, ROI, vendor risk, audit trail, KYC/AML.

— Pain —

You’ve got 18–60 prospective members across multiple jurisdictions and a mandate to deploy capital this quarter. Legal needs a wrapper that won’t trigger Investment Company Act registration. Security insists on SOC 2 evidence. Engineering needs voting, gating, and treasury controls that won’t melt on L2. Meanwhile, procurement wants one accountable vendor.

Typical friction points we see:

• Your “club” looks like a fund the minute passive members show up, or once you solicit publicly. SEC rules for investment clubs cap you at 100 members and require non-public offerings; missteps risk enforcement and re-papering. (sec.gov)
• Entity limbo: Delaware LLC operating agreements can reference smart contracts, but you don’t get purpose-built DAO statutes; Wyoming (DAO LLC) and Utah (LLD/DAO) now offer explicit recognition—but with different disclosures and naming rules. (law.justia.com)
• KYC/AML is a showstopper: finance wants Travel Rule coverage and repeatable controls for auditors—even when members hold with “unhosted” wallets. (fatf-gafi.org)
• Onchain governance is either too expensive or too flimsy. Token-weighted voting needs anti-plutocracy controls; offchain voting without secure execution is a red flag for risk.
• Treasury ops stall without an enterprise-grade multisig posture, role separation, and immutable approvals. Safe has become the de facto standard for DAO treasuries, with $50B+ secured and institutional-scale volume, but you need it wired to your policies. (messari.io)
• Deadlines slip: ad hoc legal drafts, governance rewrites, and auditors asking for evidence trails (change control, incident response, member whitelists) kill the quarter.

— Agitation —

• Missed deployment windows: Every month of delay in club formation and first allocation burns opportunity cost and sours LP/member momentum.
• Regulatory risk compounds: Public solicitation or >100 members can flip you into investment company territory; “fixing it later” is expensive. (sec.gov)
• Security exposures: A single signer, no timelock, or unaudited modules can lead to seven-figure treasury risk. Procurement will block you until SOC 2 controls and third‑party audits are evidenced.
• Cost blowouts: L1 voting can cost $100s/proposal; poor gas patterns and non-standard contracts drive up audits and incident handling. Post‑Dencun L2 fees are 95% lower—you should be designing for that now. (cointelegraph.com)
• Tax timing: Without partnership treatment clarity (Form 1065, K‑1 workflows), your back office faces March 15 crunch with incomplete data. (irs.gov)

— Solution (7Block Labs) —

We co-design the legal wrapper and the code path from day one, so your counsel, CFO, and engineers sign off together. Our “Wrapper + Wallet + Votes + Vaults” methodology is tuned for investment clubs that want onchain coordination without regulatory whiplash.

1. Wrapper: pick a statute that aligns with membership, disclosure, and exit

• Wyoming DAO LLC
  • What you get: DAO status in articles; permitted reduction of fiduciary duties; required “DAO/LAO/DAO LLC” suffix; conversion path from a standard WY LLC. (law.justia.com)
  • When to use: U.S.-centric membership, <100 members, familiar with WY agents and filings.
• Utah LLD/DAO (effective Jan 1, 2024)
  • What you get: a DAO as its own entity type (not just an LLC supplement). State accepts DAO registrations and publishes requirements through the Division of Corporations. (commerce.utah.gov)
  • When to use: U.S. club seeking modern DAO-first statute and clear state guidance.
• Marshall Islands DAO LLC
  • What you get: explicit DAO LLC, “member-managed” or “algorithmically managed,” for-profit (3% GRT) or non-profit options; annual reports; beneficial ownership filings; typical 2–4 weeks lead time. (blockworks.co)
  • When to use: global footprint, onchain-forward governance, and desire to separate from U.S. state regimes while still respecting U.S. sales rules.

Reg boundary for clubs: Stay within SEC’s club parameters—no public offering, cap membership at ≤100, ensure active participation to avoid “passive” membership characterization. We implement join flows that reflect this in code (see below). (sec.gov)

1. Wallet/Treasury: enterprise multisig plus policy rails

• Safe smart accounts with role separation and execution policies:
  • Modules: timelock executor; spending limits; address book allowlists by asset class.
  • GTM proof: Q1’25 State of Safe—$52.3B TVS, $189.6B quarterly volume processed, 41.6M accounts. This is the operational baseline we tailor to your policy. (messari.io)
• Offchain-to-onchain proposal execution via Snapshot + Zodiac Reality Module (“SafeSnap”):
  • Offchain voting, onchain enforceability, bond/cooldown to mitigate griefing. (zodiac.wiki)

1. Votes: governance that’s fast, cheap, and auditable

• OpenZeppelin Governor with ERC20Votes (EIP‑2612 permit) for onchain proposals where it matters (asset allocation, parameter changes), backed by historical checkpoints (no double-vote via token transfers). (docs.openzeppelin.com)
• Gasless “onchain” voting using Snapshot X (Starknet storage proofs) to drive participation without custody frictions; relayed votes signed with the member’s L1 wallet. (theblock.co)
• Optional privacy voting for sensitive matters (MACI/Sismo-based attestations) without leaking member balances publicly. (docs.sismo.io)

1. Vaults: standardized pooling with compliance gates

• ERC‑4626 vaults for capital pooling and strategy accounting; extend with ERC‑7540 (asynchronous flows)—useful for RWA or delayed settlements. (ethereum.org)
• Permissioning layer: ERC‑3643 (T‑REX) or equivalent to enforce “verified holder” transfers at the token layer when dealing with RWAs or geofenced allocations; backed by ONCHAINID. (tokeny.com)

1. Identity, KYC/AML, and procurement evidence

• ZK‑KYC integration: Polygon ID/zkMe credentials allow “is accredited/is resident in X/is over 18” checks without exfiltrating PII; compatible with smart contract verification. (github.com)
• BSA/Travel Rule posture: for any fiat on/off-ramps or VASP interactions, we integrate Travel Rule data handling and document exceptions for unhosted wallet counterparties per FATF guidance—this is what your auditors want to see. (davispolk.com)
• SOC 2 for procurement: we align artifacts to AICPA Trust Services Criteria (change management, incident response, access reviews, vendor risk) so security reviews pass in weeks, not quarters. (ey.com)

1. Auditability and security-by-default

• Standards-based contracts using OpenZeppelin Contracts v5.x (Solidity ^0.8.24); governance and tokens adhere to EIP‑712 typed data and EIP‑1271 contract signatures. (docs.openzeppelin.com)
• Onchain audit attestations (ERC‑7512, draft): we can pin audit summaries onchain to your deployed contracts, so “has this exact bytecode been audited by X?” is machine-verifiable. (eips.ethereum.org)

— Practical Architecture (reference) —

Core flows we deploy on an L2 that your finance team will accept:

• Membership onboarding
  • Step 1: Legal entity + operating agreement (WY/UT/RMI) specifying tokenized membership units and active participation obligations.
  • Step 2: KYC/Accreditation with ZK credential issuance; wallet proves attributes (e.g., “accredited US investor”) to a verifier contract without revealing PII.
  • Step 3: Mint membership token gated by verifier; if club must remain ≤100 members, enforce a hard cap at contract level; block “transferability” except through approved flow to keep members active and avoid passive interests. (sec.gov)
• Governance and execution
  • Snapshot/Snapshot X used for low-stakes and frequent decisions (program budgets, ops). Reality Module + Safe executes approved payloads with cooldown and bonds. (zodiac.wiki)
  • OpenZeppelin Governor used for high-stakes proposals (capital calls, allocation changes). Tokens implement ERC20Votes checkpoints and EIP‑2612 permits; quorum adjusts as supply changes. (docs.openzeppelin.com)
• Treasury and strategies
  • Funds reside in Safe with execution policies; strategies are ERC‑4626 vaults. Post‑Dencun, target L2s where execution costs are cents and batch operations are practical. (cointelegraph.com)
• Tax and reporting
  • Treat the wrapper as a partnership: Form 1065 + K‑1 per member; we output CSVs/APIs to back-office systems on close (capital accounts, realized/unrealized, fee splits). (irs.gov)

— Example: Minimal building blocks (Solidity) —

ERC20Votes membership token (historical checkpoints + permit):

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.24;

import {ERC20} from "@openzeppelin/contracts/token/ERC20/ERC20.sol";
import {ERC20Permit} from "@openzeppelin/contracts/token/ERC20/extensions/ERC20Permit.sol";
import {ERC20Votes} from "@openzeppelin/contracts/token/ERC20/extensions/ERC20Votes.sol";

contract ClubToken is ERC20, ERC20Permit, ERC20Votes {
    address public verifier; // e.g., PolygonID/zkMe verifier contract
    uint256 public memberCap = 100;

    uint256 public members; // track unique holders admitted via mint

    mapping(address => bool) public admitted;

    constructor() ERC20("Club Token", "CLUB") ERC20Permit("Club Token") {}

    function admitAndMint(address to, uint256 amount) external {
        require(_passesVerifier(to), "KYC/eligibility failed");
        if (!admitted[to]) {
            require(members + 1 <= memberCap, "Member cap");
            admitted[to] = true;
            members++;
        }
        _mint(to, amount);
    }

    function _passesVerifier(address who) internal view returns (bool) {
        // check verifier contract; details depend on credential scheme
        // return IVerifier(verifier).isEligible(who);
        return true;
    }

    function _update(address from, address to, uint256 amount)
        internal
        override(ERC20, ERC20Votes)
    {
        // Optional: restrict “transfers” to avoid passive holder drift
        if (from != address(0) && to != address(0)) {
            require(admitted[to], "Recipient not admitted");
        }
        super._update(from, to, amount);
    }
}

Governor with timelock and Safe integration: use OpenZeppelin’s GovernorVotes/GovernorTimelockControl and route execution to Safe via module or direct calls depending on policy. (docs.openzeppelin.com)

ERC‑4626 vault for pooled strategy:

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.24;

import {ERC4626} from "@openzeppelin/contracts/token/ERC20/extensions/ERC4626.sol";
import {ERC20} from "@openzeppelin/contracts/token/ERC20/ERC20.sol";

contract ClubVault is ERC4626 {
    constructor(ERC20 asset_) ERC4626(asset_) ERC20("Club Vault Share", "cSHARE") {}

    // Optional: override deposit/mint to check club admission, pause windows, etc.
    // For async RWA flows, add an ERC-7540-compatible request queue.
}

— Best Emerging Practices (2025–2026) we apply —

• L2-first governance after Dencun: design for extremely low fees and high participation; batch ops and use paymasters/4337 for sponsor flows during member onboarding and voting. (cointelegraph.com)
• ERC‑4337 smart accounts for admins: recovery policies, spending limits, and batched proposal execution without exposing EOAs. We implement paymaster policies for predictable costs. (docs.erc4337.io)
• Onchain audit attestations (ERC‑7512, draft) + conventional PDF reports: procurement loves machine-verifiable “this bytecode has been audited by X.” (eips.ethereum.org)
• Snapshot X for “gas-free, onchain” voting: Starknet storage proofs keep outcomes enforceable while keeping costs near zero; combine with Reality Module bonds/cooldowns. (theblock.co)
• Permissioned token layers (ERC‑3643) for RWA sleeves or jurisdictional restrictions inside the club. (tokeny.com)

— Proof (GTM Metrics you can forecast) —

• Participation uplift: offchain or gasless onchain voting regularly doubles voter turnout compared to L1-gated voting; Snapshot X removes transaction fees and custody friction. (theblock.co)
• Cost reduction: post‑Dencun, L2 governance and vault ops are cents-level; expect 90–95% lower execution costs vs pre‑Dencun L1 flows. (cointelegraph.com)
• Security posture: deploying with Safe as treasury control aligns with the market’s most widely used smart-account standard; Messari reports $52.3B secured and $189.6B quarterly volume (Q1’25), giving your board confidence in operational durability. (messari.io)
• Time-to-entity: RMI DAO LLCs typically complete in ~2–4 weeks including annual report setup; Utah accepts DAO registrations since Jan 1, 2024; Wyoming DAO LLCs are standard practice. (pontinova.law)
• Compliance readiness: our KYC/AML and Travel Rule design aligns to FATF updates for VASPs (and documents controls where unhosted wallets are in scope) so your audit committee has clear, reviewable evidence. (fatf-gafi.org)

— What we deliver in 90 days —

Day 0–30: Blueprint and entity

• Jurisdiction selection memo (WY/UT/RMI) with counsel alignment.
• Operating agreement language mapped to onchain parameters (quorum, proposal thresholds, timelocks).
• Procurement packet: architecture diagrams, data flows, SOC 2 control mapping, vendor risk matrix.
• Entity formation kick-off (registered agent, filings, member language). (commerce.utah.gov)

Day 31–60: Code and integrations

• Governance: OpenZeppelin Governor + Snapshot X + Reality Module wired to Safe.
• Treasury: Safe policies (role separation, spending limits, time locks), signer playbooks.
• Vault: ERC‑4626 strategy shell, with ERC‑7540 request queue if RWA/async.
• Identity: ZK‑KYC verifier contract; member cap and transfer gating at token layer.
• Audit trail: change management, CI/CD with reproducible builds; onchain audit attestations (ERC‑7512 draft). (docs.openzeppelin.com)

Day 61–90: Dry runs and deployment

• Simulation: end-to-end proposal → vote → Safe execution; failure drills and incident response runbooks.
• Back office: K‑1-ready exports, capital accounts, and price feeds.
• Formal security review plus remediation, then production deploy on target L2.

— Why 7Block Labs —

• We build and audit the stack your finance, legal, and security teams need—not just “a DAO.” See our custom blockchain development services, smart contract development, and security audit services.
• Integration-first: we wire in the tools your team already uses, from Safe to Snapshot and KYC providers, with blockchain integration and cross-chain solutions where needed.
• DeFi-native, enterprise-ready: we balance gas optimization with your SOC 2 evidence trail, and we speak procurement.

— Risk and compliance notes (brief, in depth) —

• SEC investment club constraints: keep to ≤100 members, avoid public solicitation (including “looking for members” language on public sites), maintain active participation (no purely passive members) to reduce the risk of being deemed a security or an investment company. We encode the cap and “admitted” checks onchain to reflect this policy. (sec.gov)
• KYC/AML perimeter: If the club accepts fiat or interacts with VASPs, implement Travel Rule data handling; when members self‑custody, capture required originator/beneficiary data at the gateway and document exceptions per FATF. (davispolk.com)
• Tax: Treat wrapper as a partnership with Form 1065 + K‑1; we produce ledgers and exports that let your accountants close by March 15. (irs.gov)

— Where to go from here —

• If you’re a DeFi-native org: you’ll care about “gas optimization” and liquidity mining mechanics; we’ll bias toward ERC‑4626 strategies and gasless voting, and link with our DeFi development services.
• If you’re a brand or community: your governance may be simpler; our dApp development and NFT development services cover that path.

Call to action (Enterprise): Book a 90-Day Pilot Strategy Call

References (selected)

• SEC guidance on investment clubs: member caps and public solicitation risks. (sec.gov)
• Utah DAO Act (registrations since Jan 1, 2024). (commerce.utah.gov)
• Wyoming DAO LLC statutory requirements. (law.justia.com)
• Marshall Islands DAO LLC formation and options. (blockworks.co)
• OpenZeppelin Governor and ERC20Votes docs. (docs.openzeppelin.com)
• Snapshot X and Zodiac Reality Module. (theblock.co)
• ERC‑4626 and ERC‑7540 (asynchronous vaults). (ethereum.org)
• ERC‑3643 permissioned tokens for RWA compliance. (tokeny.com)
• ERC‑4337 account abstraction documentation. (docs.erc4337.io)
• Dencun fee impact on L2s (95%+ reductions). (cointelegraph.com)
• Safe adoption and scale (Q1’25). (messari.io)
• IRS Form 1065 instructions (partnership returns). (irs.gov)
• SOC 2 guidance update (AICPA Trust Services Criteria). (ey.com)

Book a 90-Day Pilot Strategy Call