The law allows legal entities registered in the country to formally adopt DAO governance structures and tools.
The Republic of the Marshall Islands, an independent island nation in the Pacific Ocean near the equator, has announced that the Decentralized Self-Governing Organizations Act of 2022 has officially come into effect.
The law recognizes decentralized autonomous organizations and allows legal persons registered in the country to formally adopt the governance structures and tools of the DAO. The government hopes that this decision will encourage the growth of decentralized entities and their accompanying elements within the state.
According to the announcement, the DAO Act of 2022 will allow DAOs to incorporate as Limited Liability Companies (LLCs), allowing them to identify themselves as a DAO LLC. The act is also set to allow for-profit DAOs and non-profit DAOs to register while providing definitions and regulations for DAO formation, agreements, and the use of smart contracts. In addition, the new law allows for the creation of an investment fund for the Marshall Islands government to continue education and training around DAOs and their integration into the economy.
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The Republic of the Marshall Islands Minister of Finance, Bransen Wase, said: “With this passage of the DAO Act of 2022, the Marshall Islands commits to dedicating its courts and resources to the growing world of decentralization and to recognize the unique place that self-governing organizations can.” to assert itself not only in the blockchain space, but also in the wider economy.
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In February, the Marshall Islands officially recognized DAOs as legal entities, allowing them to register and do business in the country. The new law goes further by allowing corporations to incorporate and identify as a DAO LLC.
In recent years, the Marshall Islands has been actively exploring use cases for digital assets, with the government taking steps to create a blockchain-based cryptocurrency called Sovereign (SOV).