In an advanced report, the policymakers in Marshall Island approved new legislation on crypto assets. The report demonstrated that the new law aims to strengthen existing laws on decentralized autonomous organizations (DAOs).

 At the initial rule-making process, the bill was formulated by David Paul, an active advocate for crypto, and his close ally Adam Miller, the chief executive of MIDAO. The collaborative efforts aimed at revising the Decentralized Autonomous Organization Act of 2022 to meet the global standards for DAO.

Marshall Island Adopts New Legislation for DAO

An exclusive interview with Miller revealed that the new Decentralized Autonomous Organization Act of 2023 differs from the old provision for DAO. The CEO admitted that the new legislation provides a comprehensive law for DAOs across the globe.

The executive anticipates that the new law will be a roadmap for regulating the DAOs in the world. The executive noted that the new legislation has incorporated some of the elements of the old law.

 Primarily, the amendment of the DAO laws aimed at strengthening the existing laws. According to Miller the new law has reduced the registration time for DAOs from 60 to 30 days.

In the old law, the registration was conducted between 30 to 60 days. The executive noted that the new provision aimed at improving the attractiveness of DAO ecosystem in the region. He confessed that the new rules removed some of the restrictions on DAO entities.

Initially, the DAOs were held accountable for using open-source software. Miller stated that under the new rules, DAOs creating open-source applications will not be held accountable for using their proprietary software.

 The executive noted that the new legislation considers governance tokens not as securities. It implies that the governance tokens are limited from offering economic rights.

Marshall Island Adopts DAO as Legal Entities

Miller confirmed that the amendment of DAO legislation was crucial to address the challenges battling Web3 and the DAO ecosystem. The executive noted that lately legal practitioners have raised concerns about the establishment of practical governance tools. Miller described the new legislation as groundbreaking crypto laws. 

Remarkably, Miller and Paul latest development aims at supporting the Island country to attain the DAO goal. In 2022, Marshall Island accepted DAO as a legal entity. The adoption of DAO in the region aims to accelerate the growth of decentralized finance (DeFi) and related entities.

This development allowed the registered legal entities to adopt the DAO structure and the governance model to optimize their operations. The government anticipated that adopting friendly regulations on DAOs would encourage the number of DAOs to increase.

 In 2021, the Island country had around 100 registered DAOs.The exciting growth of the DAOs in Marshall Island inspired the government to partner with MIDAO to provide comprehensive solutions to DAOs and Web3 entities.

Role of MIDAO

The partnership mandated the MIDAO to oversee the registrar’s office for Web3 and DAOs. The MIDAO team supports legal entities to set shop in the Island country.

A review of the requirement for establishing DAO in Marshall Island demonstrates that an individual or entity must create an account with MIDAO.

In the subsequent process, the applicant will be required to complete the registration process by engaging MIDAO agents. Under the DAO requirements, the DAO entity will be restricted from having a board of directors to operate in the Island country.

 The old rules demonstrate that based on the decentralized nature of DAO, all the data will be stored on the blockchain technologies. It implies that DAO requires less paperwork and writing. 

The report demonstrated that DAO will have anonymous members except for one member. The Marshall Island requires the un anonymous DAO member to be from outside the country. Reports indicate that the DAO member meets the existing requirement such as know-you-customers (KYC) requirements.

In July, the MIDAO generated $1 million in a funding round to support the regulation on Web3 and DAO. The fundraising aimed to strengthen the operation of Web3 organizations in the region. Also, MIDAO aimed at improving the accessibility of legal and regulatory frameworks to Web3 entities.