Biden to Trump Policy Change Makes Decentralization Optional, Tally DAO Platform Closes After 6 Years

Tally, a leading governance platform for more than 500 decentralized autonomous organizations (DAOs) including Uniswap and Arbitrum, will cease operations after six years. CEO Dennison Bertram revealed that two fundamental forces driving demand for governance tools—regulatory threats and the rapidly growing decentralized application ecosystem—have both disappeared. In an interview with CoinDesk, Bertram analyzed how shifts in U.S. government policy have fundamentally changed the dynamics of the crypto industry.

Gensler Regulations Force Decentralization, Trump Administration Loosened Regulations Make It Optional

During Gary Gensler’s leadership of the SEC, strict interpretations of securities laws created significant legal risks for crypto projects. According to the Howey Test, a token is at risk of being classified as a security if there is a clearly identifiable group making managerial decisions that drive its value. The industry responded by pushing decision-making through DAOs, distributing control across thousands of wallets so no single entity could be said to control the network.

Governance tools like Tally are not just add-ons—they are an integral part of legal strategy. The infrastructure provided by Tally, including voting pathways, delegation tools, and dashboards, enables large DAOs to conduct governance processes in a way that complies with the strict regulatory framework of the Biden era.

However, since the change in administration, policy signals have shifted dramatically. The Trump administration signaled a more permissive approach to traditional crypto operations. “The Trump administration clearly signaled that you’re not in trouble, go ahead and do what you want,” Bertram said. This looseness has given existing organizations significant room to reassess their need for decentralization. As legal threats diminish, DAO structures have shifted from necessity to choice—and many teams opt not to adopt them.

Crypto Application Ecosystem Fails to Grow as Predicted

Tally’s business model was built on two key assumptions. The first was the dominance of regulation, as discussed above. The second was the belief that the Ethereum ecosystem would produce a “limitless garden”—thousands of protocols and Layer 2 (L2) applications, each requiring specialized governance infrastructure.

“For Tally and organizations like Tally to exist, it’s not enough to just have Uniswap, Aave, one or two L2s,” Bertram explained. “That would be a very different consulting business.” This thesis was the core of Tally’s $8 million funding round last year, arguing that thousands of L2s would need governance tools.

But market reality has been different. Instead of thousands of L2s, the industry has experienced significant consolidation around a few dominant protocols. Crypto finds product-market fit in payments and speculative markets like prediction markets, but the rich consumer application layer that should support governance infrastructure businesses has never developed as expected.

“There are no venture-backed businesses in governance tools for decentralized protocols,” he wrote in the shutdown announcement. This failure reflects a fundamental industry challenge: creating a broad and diverse application ecosystem has proven difficult.

Wave of DAO Closures: From Governance Tools to Traditional Structures

Tally’s shutdown is not an isolated phenomenon but part of a broader industry trend. Across Protocol recently proposed dissolving its entire DAO and converting into a C-corp in the U.S., citing that the DAO structure actively hampers institutional partnerships. The ACX token surged 80% following the announcement—indicating that the market views traditional structures as more profitable.

Last year, Solana-based exchanges Jupiter and NFT conglomerate Yuga Labs both abandoned their DAO structures. Yuga CEO Greg Solano described his project’s governance as “a slow, noisy, and often unserious governance theater,” reflecting practical frustration with decentralized decision-making that proves slow and inefficient.

Bertram identified a fundamental tension in this model: “There’s an inherent tension between building a collaborative, decentralized system and establishing it on the basis of crypto economics. Crypto economics implies everyone will pursue their own best interests, which is essentially a zero-sum mentality maximizing profits.”

AI Draws Top Talent Away from the Crypto Industry

Beyond governance crises, Bertram pointed to a more fundamental issue: competition from the AI sector. “AI has really become the new narrative for the future, and the narrative is much bigger and more comprehensive than crypto,” he said. This phenomenon is attracting top and brightest talent away from the crypto industry.

“The most exciting opportunities are not here, so we’re not getting the most interesting founders, the most interesting builders,” he added. When the ecosystem loses its top talent, innovation slows, and business opportunities diminish.

While still optimistic about the industry, Bertram rejects the narrative that crypto is still in its early stages. “People always say, it’s still early,” Bertram said. “I’ve been in this since 2011. I don’t know. It doesn’t feel early.” This veteran perspective indicates that the industry has moved beyond exponential growth phases and is facing serious structural challenges.

Prediction Markets Attract New Venture Capital Interest

Amid the challenges faced by traditional DAO infrastructure, the prediction market sector shows different promise. A new venture capital firm called 5c© Capital has been launched to invest specifically in startups built around prediction markets, supported by the CEOs of Polymarket and Kalshi.

The fund aims to raise up to $35 million and support around 20 early-stage startups over two years, focusing on infrastructure and services such as data tools, liquidity provision, and compliance systems rather than just exchanges. This launch comes amid rapid growth in the prediction market sector, with trading volume increasing, new users expanding, and interest from major crypto trading platforms and retail investors.

The fund has attracted over 20 early investors, including a portfolio manager from Millennium Management and other prediction market founders. This shift in venture capital indicates that although decentralized governance is losing momentum, the crypto sector continues to find new areas of practical and commercially viable growth.