Marshall Islands Recognizes DAOs As Limited Liability Companies

Key Points:

• A statute was established by the Republic of the Marshall Islands recognizing DAOs as limited liability companies (LLCs).
• The new law will allow DAOs, decentralized communities that power crypto and blockchain projects, to be incorporated in the Marshall Islands.
• Both for-profit and non-profit DAOs are covered by the new law in the Marshall Islands. The legal framework also acknowledges the internal governance procedures used by these entities, such as tokenization and voting on ideas.

Decentralized autonomous organizations (DAOs) can now register as legal bodies recognized by the international legal system, making the Republic of the Marshall Islands (RMI) the first sovereign state to do so.

The Non-Profit Entities (Amendment) Act 2021, which the RMI just passed, made this breakthrough possible. It was made official with the successful formation of Shipyard Software’s Admiralty LLC, the first DAO to obtain legal standing under this new law.

Decentralized applications (dApps), charitable causes, NFTs, decentralized finance (DeFi), and other developing tech industries all employ DAOs, which are blockchain-enabled organizations that enable new types of communal action and decision-making. DAOs can now register as Marshall Islands legal companies with the aid of MIDAO Directory Services Inc., a native company.

According to a report, the island nation in the Pacific passed the Decentralized Autonomous Organizations Act of 2022 on Thursday, extending the legitimacy of DAOs. The Marshall Islands were the first nation to recognize DAOs as legal organizations earlier this year.

According to Finance Minister Brensen Wase, the DAO law is a continuation of the island nation’s expertise in international business registration and compliance.

“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 Wase.

The new law will permit the incorporation of DAOs in the Marshall Islands, the decentralized communities that drive cryptocurrency and blockchain projects. As long as they identify as DAO LLCs, it will provide these decentralized crypto communities with a globally recognized LLC structure, according to the release. This implies that such companies must include DAO LLC in their name.

Both for-profit and non-profit DAOs are covered by the new law in the Marshall Islands. The legal framework also acknowledges the internal governance procedures used by these entities, such as tokenization and voting on ideas.

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