The Republic of Marshall Islands which is an independent state located in the Pacific Ocean has legalized the Decentralized Autonomous Organizations (DAOs) Act of 2022.
The law allows legal entities registered in the country to legally adopt DAO structure and governance tools. The authorities believe that this law will encourage the growth of decentralized entities and related elements within the state. As per the announcement, the act would allow DAOs to be incorporated as Limited Liability Companies (LLCs) and will be addressed as DAO LLCs. The act includes both “for–profit and non–profit DAOs “while providing definitions, regulations, agreements, and the use of smart contracts.
Furthermore, as per the new act, an investment fund for the government would be created. Going forward the authorities aim to utilize this investment fund for extending education and training programs around DAOs and their economical integration.
In an effort to attract Decentralized projects and DAOs, the newly created law establishes a DAO registry process which will be facilitated by MIDAO, the local company in the country. Bransen Wase, the finance minister of the Republic of Marshall Islands said, “Through the adoption of the DAO Act of 2022, the country commits its courts and resources to burgeon the world of decentralization and sees DAOs in the broader economy as well.”
The Marshall Islands realized the potential of Decentralized Autonomous Organizations (DAOs) years back. As a result, the country begins exploring its use cases and created a blockchain–based cryptocurrency called dubbed Sovereign.
Initially, at the beginning of the year February 2022, the Marshall Islands already recognized DAOs as legal entities but the new law goes beyond to make them Limited Liability Companies (LLCs).