Marshall Islands Recognises DAO LLCs

in crypto •  2 years ago 

DAOs recognized as limited liability companies by the Marshall Islands

The Republic of the Marshall Islands Formally Recognizes DAO Incorporation

“We are in the midst of the blockchain revolution, and people all over the world are exploring new ways to organize and make decisions in a more efficient and egalitarian manner. Decentralized autonomous organizations present an enormous opportunity for people to organize in a more efficient and less hierarchical manner. We in the Marshall Islands recognize this unique moment to lead in this critical space,” said Bobby Muller, former RMI Chief Secretary, and President and Co-Founder of MIDAO.

This is interesting, as it discusses other options available to legalise a DAO:

2023: The Year DAOs Follow the Law?

The utility of some legal structure serves the function of creating the "O" in DAO. As most currently stand, they don't have a true corporate existence, hence many things can only be done by individuals within the DAO, rather than the DAO itself. This has consequences for personal liabilities, taxes and banking.

A common concern DAO members have when considering incorporation is whether it makes their DAO less decentralized, thus going against a core value of Web3. The thinking goes that having a legal entity creates one point of failure that is less censorship resistant than an unincorporated DAO. Consider, however, that the purpose of the entity is to create a liability target for anyone who wants to sue the DAO. If the legal entity is ever sued and drained of funds or forced out of business, that does not mean that the members of the DAO will lose their tokens, governance smart contracts or ability to reorganize and resume operations as a sort-of second chance. Having an entity does not create a target where there was none before; it just moves the target away from DAO members as individuals.

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  ·  2 years ago  ·  

I found this bit the most interesting:

Another benefit of a legal entity is that one can use the entity’s governance documents (bylaws, operating agreements, etc.) to legally require the organization to be decentralized in governance and operations. An unincorporated DAO has no recourse if a small group of individuals or a powerful third party accumulates too much power and effectively centralizes the organization.

If this past year has taught the crypto community anything, it is that no matter how regulated and trustworthy something appears, centralized entities can be co-opted, and human greed can be obfuscated.

This is something I've been saying for what seems ages. I'd like to see how that would work in practice.