DAOs have been recognized as domestic limited liability companies under existing laws in the Marshall Islands.
The Marshall Islands, located in the Pacific Ocean, have passed a new law recognizing decentralized and autonomous DAO structures as legal entities in the country.
In a press release, the national government confirmed that these blockchain-based decentralized autonomous organizations have become registered legal entities and that the country will implement a DAO registration process to encourage the growth of these types of organizations and accelerate the benefits that decentralization can bring to the local economy.
The Marshall Islands is the first country in the world to enact a law legally recognizing DAOs. The Decentralized Autonomous Organizations Act of 2022 came into effect on Thursday, according to the release shared by the government.
DAOs are now legal entities in the Marshall Islands
Marshall Islands Finance Minister Bransen Wase noted that the islands have put themselves at the forefront of new technologies and innovations with the passage and enactment of the Decentralized Autonomous Organizations Bill.
According to Wase, the islands offer a favorable environment for the development of DAO organizations, providing a space in which these structures can be domiciled easily, efficiently and profitably.
The Marshall Islands finance minister also highlighted that decentralized autonomous organizations have the potential to occupy an important space not only in the blockchain industry, but also in the economy in general.
Decentralization offers a great opportunity for people to organize themselves in a more efficient and less hierarchical way, said former Chief Secretary of the Islands Bobby Muller, who is also the chairman and co-founder of the MIDAO project.
The Marshall Islands has partnered with this project to facilitate the registration of DAOs in the country and explain the benefits that their jurisdiction offers to autonomous organizations.
Wyoming offers legal protection to DAOs
The Marshall Islands is not the only jurisdiction that has recognized DAOs as legal entities or organizations within its territory. So has the US state of Wyoming, which registered its first DAO, American CryptoFed, in the middle of last year after passing a regulation to recognize autonomous organizations as a type of limited liability company (LLC).
On the other hand, the Marshall Islands has been exploring the potential and opportunities of the blockchain industry for some time now.
In 2020, the island nation launched a national digital currency based on the Algorand blockchain. The digital currency or CBDC, called Sovereign, was created to help the islands overcome their dependence on the dollar and to strengthen the local economy.
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