The Marshall Islands have passed a law on the registration of DAOs
Decentralized autonomous organizations (DAOs) will be able to officially register as limited liability companies in the jurisdiction of the island nation.
The government of the Marshall Islands has passed a new law that will allow decentralized autonomous organizations (DAOs) supporting crypto projects to be officially registered in the country. MIDAO, the company responsible for the new registration procedure, reported the development. Such crypto communities can now obtain the status of an LLC, which is an internationally recognized equivalent of a limited liability company.
The Marshall Islands is a Pacific island country in Micronesia with a population of around 60,000 people, associated with the United States (the United States provides protection, grants for financing, and access to its social services for citizens of this country).
Decentralized autonomous organizations have no central decision-making authority and are governed by a community of members who own governance tokens and participate in voting to make decisions. As a result, DAOs are not registered in any jurisdiction, which concerns regulators.
The US Commodity Futures Trading Commission (CFTC) has already fined a similar community and its founders for trading digital assets without proper registration and the absence of a customer identification program on the platform. CFTC noted that regardless of the form of management, the organization must be responsible for illegal activities.
The Marshall Islands recognized decentralized organizations as legal entities earlier this year. Since then, DAOs have been able to operate in the country, but the new law allows them to register as LLCs and recognizes their governance system, voting processes, and tokenized structure (DAO voting rights are held by owners of governance tokens).
The law also includes the establishment of an investment fund for educational projects in the field of DAO and further integration of these communities into the economy.
The country's authorities say they intend to attract various DAOs to their jurisdiction in this way. The company appointed to handle community registration claims to have experience in attracting and explaining why the legal system of the Marshall Islands is more advantageous for DAO structures than in other jurisdictions around the world.