DAO Laws 2.0: Marshall Islands Pursues Crypto Growth

The Marshall Islands continues to position itself at the forefront of cryptocurrency and the adoption of decentralized autonomous organizations (DAOs). In a recent conversation on The Network State Podcast, Minister Joe Bejang and Senator David Paul reiterated the nation's commitment to supporting DAO entities through progressive legislation.

Minister Bejang stated, "The government is in full support of the passed law. It went through the proper and thorough process, as any law should, through the Parliament. When it reached the Parliament, it was unanimously decided to be passed."

The unanimous 33-0 passage of the Digital Assets and DAOs Act in February 2022 demonstrates the broad commitment across the Marshall Islands' political spectrum to supporting DAOs and cryptocurrency innovation.

The Global Impact of Cryptocurrency and DAO Adoption

The global cryptocurrency market has grown significantly in recent years, expanding from $780 billion in early 2021 to over $3 trillion by November 2022. Decentralized finance (DeFi) built on blockchain technology allows for financial products and services outside of traditional centralized intermediaries.

DeFi overcomes geographic barriers, expanding access to financial services globally. According to the World Bank, an estimated 1.7 billion adults remain unbanked, especially in emerging economies. DeFi solutions offer opportunities for greater financial inclusion through innovations like stablecoins, peer-to-peer lending, and tokenized microfinance platforms.

How DAOs Are Already Coordinating Real Resources at Scale

Alongside the rise of cryptocurrencies and DeFi, DAOs have emerged as a novel form of internet-native organization. DAOs allow global talent pools to coordinate towards shared goals and pool resources transparently, enabled by blockchain-based governance and funding.

The scale of what DAOs have already achieved is worth noting:

ConstitutionDAO raised over $47 million to bid on a rare copy of the US Constitution
GitCoin coordinates funding for public goods across the open-source software space
MetaCartel Ventures manages a decentralized venture capital investment pool
dOrg coordinates software developers entirely through on-chain governance

As cryptocurrency and decentralized technologies expand globally, jurisdictions that implement regulatory clarity today will attract the most innovative projects over the long term.

Why the Marshall Islands Has a Strategic Reason to Lead on Crypto

The existential threat climate change poses to low-lying island nations gives the Marshallese an added incentive to diversify economically. Minister Bejang noted that creating frameworks to support tools like cryptocurrency and DAOs helps "establish a stable economy even though we're a small island state."

The Marshall Islands has already demonstrated it can leverage its jurisdiction for global digital business through its ship registry, which currently ranks among the top three largest in the world and generates over $15 million in annual revenue. Expanding into entity registries for next-generation technologies like DAOs represents a natural progression from that model.

Why Small Size Is an Advantage, Not a Limitation

Senator Paul made a compelling case for why the Marshall Islands' size works in its favor:

"We can have a short turnaround time to amend our laws and our regulations so we can be the gatekeeper for these organizations on Web3. That could be our advantage, and our size could be used as an advantage for us. Our size is a disadvantage in traditional economies and finance settings because we lack economies of scale. But with technology, size is our advantage."

For DAOs and Web3 projects that need a jurisdiction to move at the pace of the technology itself, this agility matters more than the scale of a larger economy.

Ongoing Legal Upgrades: Building a Complete Crypto Legal Framework

As one of the first movers in DAO-friendly policy, the Marshall Islands is actively upgrading its legal code to account for innovations in the crypto space. Adam Miller, founder of MIDAO, outlined the scope of what has already been built:

"We have the DAO law that allows for the registration of DAOs in the Marshall Islands. It defines what a DAO is and allows a DAO to open a bank account there. We also have the Virtual Asset Issuance Act, which allows asset-backed token issuance under Marshallese law. And then, most recently, at the end of December 2022, an amendment was made to the Marshall Islands Corporations Act that allows corporations to issue shares via blockchain."

Each law builds on the existing legal foundation supporting cryptocurrency and decentralized structures:

Digital Assets and DAO Act (February 2022) — Legally defines DAOs and allows their registration as legal entities.
Virtual Asset Issuance Act (2021) — Allows asset-backed token offerings under Marshallese law.
Corporations Act Amendment (December 2022) — Allows corporations to issue shares via blockchain.

What Tokenized Asset Issuance Means for the Future

Stablecoins like USDC have already surpassed $50 billion in market capitalization, bridging traditional and decentralized finance. Tokenized stocks, bonds, commodities, and real estate will further expand the use of blockchain technology in global financial markets.

By supporting tokenized asset issuance under Marshallese law today, the nation is positioning itself to attract the next generation of blockchain companies as the technology continues to develop. Each legislative move builds on the last, reflecting a commitment to continuous legal development rather than reactive amendments.

Minister Bejang confirmed that more enabling legislation is already in progress:

"We definitely see how the MIDAO registry would benefit the economy of the RMI. We have a ship registry, which is, if I remember correctly, recently ranking second or third in ship registry rankings."

Long-Term Thinking in a Small Island Nation

While crypto asset values have fluctuated significantly, the long-term direction toward digitization and decentralization of finance remains intact. As Senator Paul noted:

"If you really look at where we are, we are such a small island country in a fiscal setting, but with the digitization of all these sectors that I mentioned, it is an equalizer. Because then, there's no excuse for us to say, 'Hey, we're at the end of the global supply chain.'"

Rather than play catch-up, the Marshall Islands' political resolve, clarity of vision, and willingness to build a clear regulatory framework position the islands for significant growth as cryptocurrency and decentralized technologies expand globally.

The combination of a track record in global jurisdiction services, an agile legislative process, and a government that voted unanimously to support this space makes the Marshall Islands a distinctive and credible base for DAOs and Web3 projects, thinking about the long term. For a deeper look at the Marshall Islands DAO legal framework, the full text of the legislation is publicly available.

Learn More About DAO Regulation and the Marshall Islands

The "Just DAO It" podcast features Adam Miller working through the nuances of legally structuring Web3 organizations across two full seasons of in-depth episodes:

The MIDAO blog also covers the legal and regulatory developments shaping DAOs and blockchain organizations globally, with practical guidance for projects at any stage.