The law permits officially adopting DAO structures and governance mechanisms by registered legal organizations in the nation.
The new law
The Decentralized Autonomous Organizations Act of 2022 has been declared law by the Republic of the Marshall Islands, a sovereign island nation in the Pacific Ocean close to the Equator. Law (1) permits legally recognized businesses registered in the nation to adopt DAO forms and governance mechanisms formally. It also acknowledges decentralized autonomous organizations. The government hopes this action will promote the expansion of decentralized organizations and the state's supporting components.
The Impact on DAOs
According to the release, the DAO Act of 2022 would let DAOs organize as limited liability corporations (LLCs), allowing them to identify as DAO LLCs. Both for-profit and charity DAOs will be able to register under the legislation, which will also define and regulate DAO creation, agreements, and smart contract usage. The new statute also permits the establishment of an investment fund so that the Marshall Islands government may continue providing DAO-related training and education programs.
With this adoption of the DAO Act of 2022, The Marshall Islands commits its courts and resources to the burgeoning world of decentralization. It recognizes the unique place that decentralized autonomous organizations can hold not only in the blockchain space but also in the broader economy, the finance minister of the Republic of the Marshall Islands. The Marshall Islands officially recognized DAOs as legal companies in February, allowing them to register and start a business there. The new regulation goes beyond this by enabling organizations to organize as DAO LLCs and identify as such. The Marshall Islands has been actively investigating use cases for digital assets over the past few years, and the government has taken steps to develop a blockchain-based cryptocurrency called Sovereign (SOV).