Republic of the Marshall Islands Passes Law Legalizing DAOs
- The Republic of the Marshall Islands has officially passed into law the Decentralized Autonomous Organizations Act of 2022.
- The law will focus on the regulation of DAOs and the law officially recognizes these decentralized corporate structures as legal entities.
- The Marshall Islands DAO, or MIDAO, will be responsible for onboarding crypto and blockchain communities that wish to register as LLCs.
- The law will recognize DAO governance, voting processes, and framework, including tokenization as legal objects.
The blockchain-based industry is currently being used with increased speculation from regulators around the world, and there has been a surge in regulatory presence in the crypto industry in the past few months. However, one of the topics that US regulators are still debating is the regulation of decentralized autonomous organizations, or DAOs. On the other hand, the Republic of the Marshall Islands has officially passed into law the Decentralized Autonomous Organizations Act of 2022.
The Decentralized Autonomous Organizations Act of 2022 will focus on the regulation of DAOs, and the law officially recognizes these decentralized corporate structures as legal entities. Therefore, it would now be easier for citizens of the Marshall Islands to work on DAOs and register them as well.
As per a release, the Pacific island nation has now recognized DAOs as “domestic limited liability companies under the country’s existing laws, underscoring investment and exploration into decentralized ledger technologies.” The government aims to “formally adopt DAO structures and governance tools.”
The announcement added that this “marks the furthest any country has gone in legalizing and encouraging the growth of decentralized entities and their associated elements, representing a unique opportunity for MIDAO’s facilitation of the DAO Registry Process in the Marshall Islands.”
“With this adoption of the DAO Act of 2022, The Marshall Islands commits its courts and its resources to the burgeoning world of decentralization, and recognizes the unique place that decentralized autonomous organizations can hold not just in the blockchain space, but in the broader economy as well,” said the Finance Minister of Marshall Islands, Bransen Wase.
Wase stated that the government believes that the island nation is “well-suited based on our history of shipping registration and compliance to take this step forward and offer DAOs a place to domicile easily, efficiently, and in a cost-effective manner.”
The Marshall Islands DAO, or MIDAO, will be the center of the DAO activity on the platform, and the entity will be responsible for onboarding crypto and blockchain communities that wish to register as LLCs in the island nation. For-profit and non-profit DAOs will be allowed to register in the country, as the law will recognize DAO governance, voting processes, and framework, including tokenization, as legal objects.
Interestingly, the CEO of MIDAO, Adam Miller, gave the example of the implosion of FTX while stating that if the exchange created by Sam Bankman-Fried, popularly known as SBF in the crypto space, had followed a DAO structure, the collapse could’ve been prevented. This is because in a DAO structure, the power rests with the community of the DAO, and every decision is taken by vote.
“In an effort to attract DAOs and Web3 pioneers, this newly passed legislation establishes a DAO registry process, to be facilitated by MIDAO, a local company with the expertise to attract and explain why the RMI legal system is more beneficial to DAO structures than other jurisdictions in the world,” read the release.