The Republic of the Marshall Islands approved a bill that allows decentralized autonomous organizations (DAO) to be legally incorporated as limited liability companies (LLC) with the right to engage in commercial activities.
The Parliament of the Republic of the Marshall Islands passed the Decentralized Autonomous Organizations Act. According to the new law, legal entities registered in the country may now formally establish commercial DAOs with an internationally recognized LLC structure.
Furthermore, the new legislation envisages:
- forming a regulatory framework for registering DAOs, entering into legal documents, and using smart contracts;
- recognizing a decentralized governance structure and decision-making tools, including tokenization;
- creating a government investment fund to develop educational programs regarding DAOs and develop ways to better integrate them into the economy.
The government expects that legislative recognition of decentralized organizations will encourage the development of related technologies within the state.
“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,” Brensen Wase, Marshall Islands Finance Minister, said in a press release.
In February 2022, the government of the Marshall Islands approved an amendment to the Non-Profit Entities Act, making it possible to register DAOs as non-profit LLCs with charters and memberships recorded on blockchain.
