The Pacific island state, long keen to adopt blockchain technology, recognizes decentralized autonomous organizations.
The Republic of the Marshall Islands has moved to officially recognize Decentralized Autonomous Organizations, better known as DAOs, as legal entities – a move that gives collectively owned and managed blockchain projects formal recognition on the world stage.
DAOs, which are blockchain-based entities governed by self-organizing communities, gained legal recognition in the Marshall Islands after the country passed the Amended Not-for-Profit Entities Act of 2021. first DAO, Admiralty LLC. The incorporation was aided by MIDAO Directory Services Inc., a nationwide organization that was set up to help DAOs register in the Marshall Islands.
As it stands, the new legislation allows any DAO to register and establish operations in the Marshall Islands.
Bobby Muller, former chief secretary of the Republic of the Marshall Islands and co-founder of MIDAO, said his country recognizes that now is a “unique time to lead” the “blockchain revolution.” He said DAOs will play an important role in creating « more efficient and less hierarchical » organizations.
In a written statement to Cointelegraph, Muller said the Marshall Islands is looking to become a global hub for DAOs, « both in registration and direct debit, but also in developing use cases and promoting of mass adoption. He further explained:
« The strategy is to provide the lowest cost of incorporation, a supportive government with internationally recognized courts, and an environment receptive to technological advancements. »
The Marshall Islands is an independent island state located in the Pacific Ocean near the equator with a population of around 59,000 in 2019, according to the World Bank. The island state has been actively exploring use cases for digital assets since at least 2018, with the government introducing measures to create a blockchain-based cryptocurrency that would be recognized as legal tender alongside the US dollar.
As Cointelegraph reported, the Marshall Islands already approved the creation of a new cryptocurrency, dubbed Sovereign (SOV), in February 2018. As you might expect by now, the International Monetary Fund, or IMF, criticized the plan for fear that a digital sovereign currency would undermine the state’s financial stability. The Washington-based lending institution issued similar criticisms of El Salvador, which became the first country to recognize Bitcoin (BTC) as legal tender.
However, Marshall Islands Senator David Paul pointed out that the country’s DAO legislation does not pose the same complications as a state-backed cryptocurrency. “A sovereign digital currency is financial and generates many concerns from a money laundering perspective,” he told Cointelegraph in a written statement. « It’s a different area for DAOs, because it’s more about giving them legal recognition to make their case to regulators, investors and consumers. »
COINTELEGRAPH
By SAM BOURGI
