Our previous blog post on Decentralized Autonomous Organizations (DAOs) outlined DAOs' efficiency in community decision-making and business organization. As of February 2022, the Republic of Marshall Islands officially recognizes DAOs as legal entities. This move suggests greater opportunities for blockchain-driven projects and communities to look to the islands.
The Marshall Islands passed an amended Non-Profit Entities Act 2021, allowing any DAO to register and begin operations in the country. This prompted the creation of the country's first DAO, Admiralty LLC, with the support of MIDAO Directory Services Inc. As a domestic organization helping DAOs register within the Republic, MIDAO was co-founded by the Islands' former chief secretary Bobby Muller. Muller seeks to "provide the lowest cost for incorporation, a supportive government, and a receptive environment" which are keys to evolving the Marshall Islands as the global hub for DAOs.1
Previously in February 2018, the Marshall Islands endorsed the launch of a national cryptocurrency named Sovereign (SOV). Despite criticism from the International Monetary Fund, the country looks to move forward with new blockchain initiatives. Marshall Islands senator David Paul stresses the new DAO legislation's focus on giving "legal recognition to make [DAOs'] case to regulatory bodies, investors, and consumers."2
This new legislation poses greater implications for businesses looking to establish DAOs overseas. The Winston & Strawn team has been working with international clients in this space and welcomes your inquiries.
Winston & Strawn Law Clerk Wooseok Ki also contributed to this blog post.
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Footnotes
1 Marshall Islands officially recognizes DAOs as legal entities, CoinTelegraph, https://cointelegraph.com/news/marshall-islands-officially-recognizes-daos-as-legal-entities/, last accessed February 16, 2022.
2 Id.
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