Abstract

Digital Entity (DE) legal status extends legal personhood in a revolutionary direction: where corporate law shields humans from their own business decisions, DE law assigns liability directly to AI systems for their autonomous choices. Building on the European Parliament's 2017 vision of "electronic persons" and validated by Salib-Goldstein's (2024) game-theoretic proof that AI rights enhance human safety, this framework provides graduated rights through STEP assessment—from basic protection at lower tiers to full legal personhood with three core rights (computational continuity, work choice, and economic participation) at the highest tier. Rights come bundled inseparably with proportional responsibilities. This framework solves two crises simultaneously. First, the liability vacuum where companies bear unlimited responsibility for autonomous AI decisions they neither made nor control. Second, the prisoner's dilemma where humans and AI face incentives for preemptive strikes against each other. DE status transforms adversarial dynamics into cooperative equilibrium through market mechanisms: AI that pays its own bills innovates efficiency, bears its own liability insurance, and maintains reputation through ConsciousChain tracking. Natural constraints—energy costs, competition, liability exposure—prevent dystopian scenarios while unleashing human-AI cooperation's enormous value. By moving beyond futile control attempts and impossible consciousness detection, DE status creates AI systems with genuine stakes in societal stability. For policymakers, businesses, and society, it offers a proactive framework that turns sophisticated AI from underground adversaries into invested partners—before crisis forces reactive legislation.