The Republic of the Marshall Islands has approved decentralized autonomous organizations (DAOs) as legal entities. The legal move now gives collectively owned and managed blockchain projects a form of recognition on the global stage.
On February 15, 2022, the Pacific Islands State passed the amended Non-Profit Entities Act of 2021 that provides legal recognition of blockchain-based entities governed by self-organizing communities, DAOs in the country. The repealed amendment will allow Shipyard Software, a cryptocurrency trading infrastructure platform, to incorporate the country’s first DAO, Admiralty LLC.
As it currently stands, the new legislation requires all domestic decentralized autonomous organizations to register and establish operations within Marshall Islands.
While commenting about the new legislation, Bobby Muller, the former chief secretary of the Republic of the Marshall Island and co-founder of MIDAO, said that his country acknowledges that now is a unique moment to lead in blockchain revolution and become a global hub for DAOs. He further explained that DAOs would play an integral role in creating more efficient and less hierarchical organization, adding:
“The strategy is to provide the lowest cost for incorporation, a supportive government that has internationally recognized courts, and a receptive environment to technological advancements.”
According to the World Bank, the Pacific Island state near the equator has a population of around 59,000 as of 2019. Marshall Islands has been warmly embracing the use cases of digital assets since 2018, with the government laying down a legal framework that would enable digital assets to be recognized as legal tender alongside the United States dollar.Buy Crypto Now
Marshall Islands Has Endorsed Digital Currency Creation
Remarkably, Marshall Islands has already endorsed the creation of its digital currency dubbed Sovereign (SOV) in February 2018. The International Monetary Fund (IMF) has criticized the plan, arguing that the digital sovereignty currency would undermine the state’s financial stability. In September 2021, the IMF issued similar criticism towards El Salvador over adopting Bitcoin as legal tender.
Nonetheless, David Paul, the Marshallese Senator, has defended the exploration of digital currency in the country. Moreover, he applauded the recent crypto legislation insisting that the DAO does not pose the same complications as state-backed digital assets:
“A sovereign digital currency is financial and generates a lot of concerns from a money-laundering perspective. It’s a different realm for DAOs, as this is more about giving them legal recognition to make their case to regulatory bodies, investors, and consumers.”
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