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The Republic of the Marshall Islands (RMI) has long been a prominent jurisdiction for international business and investment companies due to its nominal corporate taxation, limited reporting requirements, and legislation based on Delaware law. In addition to being a leading jurisdiction for the shipping industry, over 40 public companies traded on NASDAQ and NYSE are domiciled in RMI. This sovereign Pacific island nation recently passed three laws that created a new type of Limited Liability Company (LLC) called a DAO LLC, available as a tax-free Non-Profit and a For-Profit. The RMI DAO LLC structure has several key attributes that make it the preferred legal structure for Web3, Blockchain, Crypto, and DAOs.
Membership and governance can be on-chain utilizing ERC-20, other crypto tokens, or other smart contracts.
Corporate governance, records, and accounting can be maintained exclusively on a blockchain.
Issue tokens including governance tokens, utility tokens, and more, with clear securities law treatment.
Limited identification and disclosure requirements for members.
No requirement to retain directors, officers, trustees, supervisors, or managers. Optionally, have managers or leverage algorithmic management.
The same liability protection and corporate personhood as other leading registered legal entities, protecting founders & members while allowing projects to own property, open bank accounts, etc.
Easier to use and lower costs than other popular jurisdictions:
No requirement to retain a local law firm or independent directors
Less legal complexity and paperwork than structures requiring multiple entities
Or browse the rest of the docs using the links to the left
Non-profits are tax-exempt, can function as ownerless entities, and are approved as non-profit at founding. Read about for-profit taxes .
are fixed & lower, and discounts are available to projects with lower treasuries
MIDAO, otherwise known as MIDAO Directory Services, is the leading Web3-, crypto-, and DAO-focused registered agent. MIDAO incorporates a variety of DAOs, crypto projects, decentralized protocols, or communities as DAO LLCs, a unique legal entity domiciled in the Marshall Islands (RMI) and specifically tailored to crypto organizations.
After signing an exclusive public-private partnership with the Marshall Islands government in 2022, MIDAO became the sole incorporator for DAO LLCs. MIDAO acts as a DAO LLC's registered agent and provides all of the template legal documents needed for registering and maintaining a DAO LLC in partnership with the Marshall Islands government. There are both non-profit and for-profit options, as well as both standard DAO LLCs and series DAO LLCs available. As the sole registered agent for DAO LLCs, MIDAO is the leading service provider for Web3 and DAO incorporation, globally.
In mid 2023, after having successfully incorporating over 40 DAOs, MIDAO sought to expand its operations, raising a $1 Million USD seed round including FJ Labs, The LegalTech Fund, Martial Eagle, and Balaji Srinivasan.
In late 2023, the DAO Act Amendment of 2023 passed, providing further legal clarity for Web3 & DAOs, such as clear securities law treatment by the RMI.
In mid 2024, the DAO Regulations passed, accelerating the registration process to under 30 days and providing for new filings forms more purpose-built for Web3 & DAOs.
In late 2024, MIDAO surpassed 200 DAO LLCs registered or under registration. MIDAO continues to advocate for new policy changes, with the support of crypto lawyers from all over the word, to continue to position the Marshall Islands as the leading jurisdiction for Web3 & DAO incorporation.
The history of MIDAO begins with the passing of the , which made it possible to register non-profit LLCs called DAO LLCs with special qualities, such as the ability to track Members using tokens rather than names and addresses and the option to have algorithmic rather than human management.
In 2022, MIDAO and the RMI Government signed a public-private partnership that made MIDAO the sole registered agent for DAO LLCs. Subsequently, the Marshall Islands incorporated its first DAO, , the governance DAO of a leading decentralized exchange, .
Later in 2022, the passed, creating the for-profit DAO LLC to complement the non-profit DAO LLC, and introducing further legal qualities and clarity for Web3 and DAOs.
When a group of people engages in a common enterprise (whether a DAO, NFT project, building a protocol, or anything) without a legal entity, they are all subject to unlimited legal liability and often tax liabilities, as their DAO would be regarded as a general partnership in most jurisdictions.
Any legal entity, RMI DAO LLC or otherwise, when used properly, reduces liability for founders, contributors, tokenholders, and other members of any project.
Corporate personhood allows groups of people to own assets collectively in a structured way, enter into contracts, and hire employees. Put simply, without corporate personhood, a DAO or project cannot own assets, enter into agreements, or act as an entity in the corporate arena.
Good examples include a project or DAO's treasury and intellectual property, such as its name & logo. Without a legal entity, it is unclear who actually owns the treasury and the property, making it all too likely they will end up in legal disputes.
Corporate personhood also allows a DAO or Web3 project to open a business bank account, pay for web hosting services, or sponsor an event. Furthermore, a legal entity allows a project to sign contracts and interact with third parties.
Without a legal entity, all DAO Members can be held accountable for taxes on any net earnings the DAO generates. For example, without a legal entity, if a DAO sells a bunch of NFTs, the members would have to pay taxes on those gains, even if they never received any of the money.
A Non-Profit RMI DAO LLC not only protects DAO Members from having any tax reporting or liability, but the entity is also not taxed by the government.
Protect yourself from unlimited liability from the start of your organization's inception (including while raising money and launching a token) rather than only once you have already made significant progress, in order to avoid putting liability for early activity on the members.
Have your tax burden (or no taxes at all if you are creating a non-profit DAO LLC) fall on the company instead of on the founders/Members.
For a good example of how this comes into play, see the .
We offer discounts for pre-funding projects so that you don’t have to wait to be able to afford registration. Check out to determine your eligibility for our Bootstrap and WAGMI packages.
No! While the term "DAO" is used in the name of the "DAO LLC" legal entity, many DAO LLCs are not "DAOs" in the traditional sense of the word. They're just taking advantage of the unique benefits and flexibility of the DAO LLC, such as anonymity for most members, having no managers required, and the crypto-friendly nature of the Marshall Islands.
Almost every crypto project - just like in Web2, TradFi, etc. - should seriously consider creating a legal structure that includes a legal entity. Read more about the benefits for non-DAOs below.
The RMI DAO LLC provides explicit legal separation between a protocol (or other open-source software used on blockchains) and the DAO LLC.
You will not be considered a VASP just because you launch and use tokens in your protocol, or because your protocol engages in DeFi etc, unlike in other jurisdictions.
Launch your token using an RMI DAO LLC for access to the compelling Marshall Islands legal framework for tokens:
You will not be considered a VASP just because you launch and sell tokens.
Clear securities law treatment, including no local securities laws that apply as long as you don't sell your token in the RMI.
Launch your token using an RMI DAO LLC for access to the compelling Marshall Islands legal framework for tokens:
You will not be considered a VASP just because you launch and sell tokens.
Clear securities law treatment, including no local securities laws that apply as long as you don't sell your token in the RMI.
The For-Profit RMI DAO LLC allows for the same pass-through tax treatment as a US-based LLC, which can be optimal for investment companies.
The 3% Gross Revenue Tax (GRT) in the RMI does not apply to capital gains or dividends, so there is no double taxation on investment income.
RMI DAO LLCs can track membership on paper, like a regular LLC, or using a multi-sig, and have no minimum membership size.
RMI DAO LLCs can have Managing Members, like regular LLCs.
RMI DAO LLCs can track the names and addresses of their members, like regular LLCs.
When the project is ready, or at your discretion, you can start using a token to track membership, remove the Managing Members, and/or allow anonymous membership.'
Even if you don't think of your organization as a DAO, leverage the DAO LLC to be able to do membership tracking, governance, etc., on-chain rather than using traditional paper-based or transfer agent methods.
RMI DAO LLCs can help you interface with the physical world, allowing you to own property and contract with traditional organizations, while having as decentralized of a governance structure as you'd like.
Allows for most company members (anyone who is not a ) to remain pseudonymous, using only their token address, not their real name and address.
Allows for most company members (anyone who is not a ) to remain pseudonymous, using only their token address, not their real name and address.
Allows for most company members (anyone who is not a ) to remain pseudonymous, using only their token address, not their real name and address.
Allows for most company members (anyone who is not a ) to remain pseudonymous, using only their token address, not their real name and address.
The Republic of the Marshall Islands (RMI) has long been a prominent jurisdiction for international business and investment companies due to its nominal corporate taxation, limited reporting requirements, and legislation based on Delaware law.
In addition to being a leading jurisdiction for the shipping industry, over 40 public companies traded on NASDAQ and NYSE are domiciled in RMI.
Approximately 20% of the world's shipping industry is registered in the Marshall Islands, making it the third largest shipping company incorporator in the world.
The Marshall Islands is a sovereign nation with a seat in the UN, but it has also been a strong ally of the US for over 80 years. Therefore, it gains the economic, geopolitical, and bureaucratic benefits of allying with the US while maintaining a pro-crypto stance—the result: a stable jurisdiction that emerges as a leader in Web3.
The Marshall Islands has passed several laws and regulations regarding the DAO LLC with near-unanimous support from the Nitijela, the RMI parliament. This provides additional stability compared to jurisdictions with no crypto-related legislation or overly restrictive regulations.
IRI is the shipping registry operating in the Marshall Islands that incorporates traditional offshore entities that aren't Web3-related, such as traditional Corporations, Trusts, and LLCs.
MIDAO is the sole registered agent for DAO LLCs, and IRI is the sole registered agent for other companies in the RMI. Just as MIDAO cannot create and maintain traditional offshore companies, IRI cannot create and maintain DAO LLCs.
MIDAO DAO LLCs are technically "Resident" companies, which is achieved thanks to the registered agent office MIDAO maintains in the RMI; the IRI supports only Non-Resident companies.
The traditional Corporations, LLCs, and Trusts registered by IRI do not get any of the benefits of the Marshall Islands DAO & Web3 laws and regulations.
The current administration and elected officials of the RMI see the economic benefits DAOs and MIDAO can bring. They are pro-crypto. Listen to the RMI administration speak with Balaji Srinivasan on his Podcast: .
A membership interest is a general term used to represent a quantifiable voting, governance, ownership, or financial right, depending on the type of entity you register (non-profit vs. for-profit).
Where other corporate types might have "shareholders", "directors", "trusteers", "officers", or other names that can have similar meaning, an LLC (including DAO LLCs) has only "members", "managing members", or other titles as defined in the company's operating agreement.
DAO LLCs are not required to have Managing Members. For the first time, with the DAO LLC, a legal entity is not required to have managers of any kind, but it’s up to you whether you want them.
Managing Members get day-to-day management rights, signatory authority, etc. There are also some social expectations around what managers are, what they get to do, whether they are good, etc.
Another thing to consider is whether you want your DAO LLC to “pass” as a traditional organization when doing KYB with other organizations. For example, if you're going to open a bank account or get a grant, and the bank says, “List your managers…” do you want to be able to say, “OK, sure!” or have to explain why you don’t have managers?
Few other jurisdictions have recognized DAOs & Web3, let alone established a legal entity structure dedicated to them. Most jurisdictions that have recognized DAOs and Web3 are states within the United States, making them less favorable from many regulatory perspectives.
The RMI has a strong association with the US, while not being under US jurisdiction. The core corporate law in the RMI is based on Delaware corporate law, making it easy to work with, while still benefiting from its more advanced Web3 & DAO legislation. The Marshall Islands enjoys some of the benefits of being a close ally (what's called a "freely associated state"), such as its use of the US Postal Service, while still retaining legal & regulatory sovereignty.
No nation in the world has this balance of stability, coupled with the flexibility and technological blockchain understanding to pass DAO-friendly legislation.
The Republic of the Marshall Islands (RMI) has long been a prominent jurisdiction for international business and investment companies due to its nominal corporate taxation, limited reporting requirements, and legislation based on Delaware law. In addition to being a leading jurisdiction for the shipping industry, over 40 public companies traded on NASDAQ and NYSE are domiciled in RMI.
One of the key concerns for US entities is around launching tokens or leveraging tokens in any way, and how that might cause regulatory issues in the hostile US environment for crypto.
See above re: US entities.
The WY DUNA is an unregistered legal entity (the U stands for "Unincorporated") which means it does not have all the same benefits of a registered legal entity, such as the ability for a bank or other third party to verify its validity with a government.
The WY DUNA, despite having "Non-Profit" in the name and having many limitations usually placed on non-profits, is taxed by the United States as a for-profit corporation. While it is theoretically possible that a DUNA can receive non-profit tax status from the IRS, it is unproven and takes a lot of time and effort compared to the easy of use of an offshore, tax-free non-profit such as the RMI DAO LLC.
See above re: US entities.
The WY DAO LLC is a for-profit entity, with pass-through tax status by default, and so it does not have the tax-free benefits of the RMI DAO LLC.
The WY DAO LLC has some odd requirements written into the law, such as for the DAO LLC to have activity every year or else be dissolved.
See above re: US entities.
DE LLCs and LLCs from other states in the United States are for-profit entities, with pass-through tax status by default, and so they do not have the tax-free benefits of the RMI DAO LLC.
DE LLCs and LLCs from other states in the United States require companies to know the names and physical addresses of all their members, thus making it ineffective to use a token to track membership.
DE LLCs and LLCs from other states in the United States require companies to have Managers, making it impossible for a company to decentralized (when it's ready) to a Manager-less structure.
The primary issue with Foundation entities (e.g. "Foundations", "Foundation Companies", etc) is that they require companies to have Directors. These Directors have some power and responsibility regarding the Company, making it impossible for a project to truly decentralize when it's ready. The Directors, for example, have to sign off on every decision a DAO or other project makes, meaning the project lacks autonomy.
Most jurisdictions also require Foundations to hire a local, independent director and a local law firm, greatly increasing cost, effort, and complexity. These structures can easily cost tens or hundreds of thousands of dollars to set up and tens of thousands of dollars a year to maintain.
Note that an RMI DAO LLC can elect to have Managers (or Independent/Nominee Managers) to play a similar role to a Foundation Director, at their discretion. The benefit of the RMI DAO LLC is that such a role is not required.
Until the advent of the RMI DAO LLC, many crypto projects were even recommended to create a BVI Foundation wholly owned by a Cayman Foundation, because they prefer the governance structure of the Cayman entity but the token laws of the BVI. Using an RMI DAO LLC, you can get the benefits of both entities without the need to create multiple entities!
Swiss Associations have the same problems as the Foundation structures listed here.
Using a Series LLC purchased from a third party who controls the Master LLC is a risky move and generally not recommended by lawyers because it risks assets and liabilities not being considered separate from the other organizations using the other Series under the Master.
A Series LLC, because it is not registered with any government, will likely have difficulty opening a bank account or passing any other KYB compliance process, unless it is actually associated with the organization controlling the Master.
If you decide a Series LLC purchased from a third party who controls the Master LLC is the right decision for you, the nice thing is that the cost is extremely low, as no government registration or compliance is necessarily required.
A regular LLC (as opposed to a DAO LLC) can be created only with the general Marshall Islands offshore registry, IRI, whereas DAO LLCs can be created only with MIDAO.
All DAO LLC fees can be paid in most cryptocurrencies or fiat.
All our prices include all government fees and MIDAO fees combined. There are no hidden fees!
MIDAO's one-time registration fee ranges from $4.5k to $9.5k, depending on the client's treasury size and funding from related entities such as a development company or operating company.
We hope this means you can set up your entity as soon as possible before doing things like raising money or launching a token, which can carry additional risk for founders if no legal entity is in place.
Our prices are set to be lower than alternative jurisdictions people usually consider when forming their legal entity.
Additionally, your total costs for creating and maintaining an RMI DAO LLC are much lower than in other jurisdictions (such as Cayman, BVI, and Swiss) that require you to hire local law firms and local independent directors.
Our annual fees are all-inclusive of government fees and any other MIDAO services; there are no hidden fees!
Any referral made to MIDAO is eligible for a 10% referral fee out of the registration fee.
The referrer can either keep the fee or apply the fee as a discount to the client they referred.
MIDAO provides discounts to clients of lawyers, corporate service providers, and other partners who directly manage the client relationship in MIDAO's place, for example, by providing templates and document support.
A DAO LLC’s Operating Agreement is its core organizing document and defines:
How the company tracks its Members (e.g., on paper vs. with a token)
How Members join or leave
How decisions are made
How profits (if any) are used and distributed
How smart contracts are involved
Other important elements of how your organization works
What you put in your OA is almost entirely up to you and your lawyers. You can write one from scratch or modify our template in almost any way you wish.
An editable, Word version of the operating agreement is available to MIDAO clients on their onboarding portal.
Are you looking to establish a non-profit entity (e.g., so that it has no taxes) or a for-profit entity (e.g., so that it can distribute accrued profits to Members)?
Will your DAO track membership on paper (usually on an exhibit to your OA) or use a token or Multi-Sig to track membership?
Does your DAO have a Multi-Sig committee that manages its treasury, such that you want to legally require them, for example, to sign in accordance with the DAO’s wishes?
What type of governance/voting structure will you use, and to what extent will you write it on paper, or will you reference a smart contract containing the details?
Does your DAO want to have Managing Members who act as an interface between the DAO LLC and the outside world? For example, Managing Members can make opening bank and other trad-fi accounts easier since most non-DAO companies have managers.
The Initial Contributions section of a DAO LLC's operating agreement, like that of a regular LLC, is one way to have Members signing the operating agreement acknowledge that property is contributed to and, therefore, owned by the company rather than by individual members. The section is optional, and DAO LLCs can also perform contributions using instruments separate from the operating agreement.
In the initial contributions section of an OA, it is common to list assets owned collectively by the DAO LLC, such as wallet or treasury addresses, Discord accounts, AWS accounts, any IP (e.g. the DAO's name & logo), etc.
Some DAOs will also list start-up costs. This can be whatever you spent your start-up costs on or any money/assets you want to contribute to the company to cover upcoming start-up costs, to make it clear that those things (accounts, money, etc.) are now owned by the company (the DAO) and not by the individuals who purchased the items or previously held the money.
You can use an amendment to your operating agreement (or any process outlined in your current agreement, such as an on-chain proposal) to change anything about the agreement. This is something you do on your own. As soon as you sign an amendment or otherwise follow a process outlined in the current agreement, the change is complete.
There is no cost to amend your agreement, it is valid as soon as it is duly executed. MIDAO and the government do not have to do anything to execute the change. You can make changes as often as you want, in any way you want, at no cost and with no involvement from MIDAO or the government.
DAO LLCs and their lawyers are responsible for ensuring that any amendments (or any other business actions you take) are consistent with your organization’s policies and procedures.
According to our , "In the event an organization cannot be successfully registered, MIDAO will return any prepaid annual fees and 50% of the registration fee."
The Marshall Islands (MIDAO) DAO LLC is the most DAO- and Web3-friendly legal entity in the world, and is available a tax-free .
An important question for any legal entity decision is whether or not to domicile in the United States. Creating an entity in the United States increases your legal nexus there and makes you subject to more US laws & regulations. If you do want to incorporate in the US (or are required to, for example because most or all of your project activity takes place in the US), the WY DUNA or DAO LLC may be a good fit for you. You can read more about choosing between the US and "offshore" in our .
The WY DAO LLC lacks some of the other of clear securities law treatment and on-chain-only reporting requirements.
There are good use cases for Series LLCs and Series DAO LLCs, such as DAOs with sub-DAOs or investment companies with multiple portfoilos. Read more .
MIDAO DAO LLCs are restricted from being used as Masters from which to sell Series for use by independent organizations for the reasons listed above. See MIDAO's for details.
The regular LLC does not get any of the benefits of the DAO & Web3 and , as they apply only to DAO LLCs.
For-Profit DAO LLCs with taxes due (learn more about for-profit taxes ) can also pay their taxes in most cryptocurrencies or fiat.
Unlike most other registered agents and registries, MIDAO does not charge you every time you have a question, need a certified document, or need to conduct a new filing. The prices listed on our include everything you might need from us.
Read more about comparing the RMI DAO LLC to other jurisdictions .
MIDAO charges an annual fee ranging from $2k to $5k (based on the client's treasury size and funding amount at the time of payment), due every January. See pricing details .
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Please contact if you are interested in becoming a reseller or learning more.
MIDAO works with resellers to ensure they have all the templates and information they need to assist their clients, but MIDAO provides less direct registration process support compared to the support provided to clients purchasing MIDAO's .
We highly recommend having a lawyer review your OA and all other legal decisions related to your company and its formation. We can help if you need one.
MIDAO provides updated templates, operating agreement support, and operating agreement workshops to various degrees with our different .
MIDAO is not a law firm and does not provide legal advice. Read our full legal disclaimer . We recommend seeking legal advice regarding your operating agreement and can help connect you with leading Web3 & DAO lawyers.
At annual filings in January, a DAO LLC has to send MIDAO an updated copy of its latest operating agreement. A DAO LLC can also optionally send MIDAO a copy of an amended OA at any time so that the Marshall Islands has the latest information on file and can produce updated documents like a for the DAO LLC, as needed, with the latest information.
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Are completely tax-free, just like a Cayman Foundation, Swiss Association, and other popular offshore jurisdictions.
Do not have economic owners (only Members with governance rights) and must spend their money only on furthering their business purpose.
Can still compensate Managers (if any), Members, and other service providers with reasonable compensation for their work.
Are allowed to have governance and/or utility tokens which apprecaite in value.
May distribute profits to their owners as dividends (Members).
Are subject to a 3% gross revenue tax, which does not apply to invested capital, capital gains, or dividends.
Non-Profit DAO LLCs are allowed to make money, i.e., generate a profit of their own, in addition to optionally raising money through donations.
Non-Profit DAO LLCs must spend their money on charitable, religious, scientific, educational, social, or other “good works," for example, to develop, support, govern, and promote open-source software, which is then made available for use on public blockchain networks.
Non-Profit DAO LLCs can make reasonable payments to their Members, Managers (if any), and others in exchange for goods or services, including management or software development.
Any entity that exclusively engages in raising or disbursing funds for purposes listed below may be granted non-profit status:
a. Charitable;
b. Religious;
c. Scientific;
d. Educational;
e. Social;
f. Fraternal; or
g. Any other types of “good works” if:
i. no part of its net earnings inures to the benefit of any person or individual;
ii. its activities do not exclusively involve disseminating propaganda or otherwise attempting to influence legislation; and
iii. it does not participate in, intervene in, or disseminate statements on behalf of or in opposition to any candidate running for public office.
A key item, as referenced above, is that "no part of its net earnings inures to the benefit of any person or individual", for example, as dividends. However, non-profits can still make reasonable payments to their Members, Managers (if any), and others in exchange for goods or services, including management or software development.
It is not possible to convert a non-profit DAO LLC to a for-profit DAO LLC or vice versa. However, you can do things similar to a conversion, such as setting up a new non-profit entity and sending your assets from the for-profit to the new non-profit DAO LLC.
A For-Profit DAO LLC is likely a better fit for an investment company, as the non-profit cannot distribute dividends from its earned profit.
It is common for blockchain protocols to be associated with a DAO, which develops, markets, and governs the protocol.
The activity of the protocol is generally structured as separate from the DAO, so people may be making money off the protocol (e.g. through staking, liquidity providing, token appreciation, etc) while still allowing for the DAO's legal entity to remain non-profit.
Many projects utilize a "dev co", "op co", or "lab co" associated with the protocol and DAO, which allows for the project to have a for-profit entity, which can distribute profits and complement the non-profit DAO. In these cases, the non-profit DAO often pays fees to the for-profit entity.
MIDAO provides template documents and document support throughout the registration process.
MIDAO provides a portal for self-service during the registration process but is always available to provide direct support via email, Telegram, etc.
Registered agent services
A local RMI address and mail forwarding
Certified and notarized documents
Template documents, e.g. amendments to operating agreements or certificates of formation
Annual operating agreement workshop and support customizing template documents
All government filings including annual filings, name changes, etc
Introductions for opening bank & TradFi accounts
Storage of official company documents
Here is the definition of a non-profit from the :
Read more on our .
Learn more about the registration process and see what services are included in MIDAO's various packages .
Most crypto projects keep their legal entities legally and financially separate from the protocols they may develop, govern, market, or otherwise operate. For example, consider that activity related to the Uniswap smart contracts is not considered to be activity related to Uniswap Labs or the Uniswap Foundation.
This distinction is made even more explicit thanks to the Marshall Islands DAO Act, which specifies, "DAO LLCs are permitted to create open source software, which is then used by other people on a blockchain independent of the DAO LLC's involvement."
It is common for projects to combine multiple legal entities to achieve their goals. For example, many projects will have a "DevCo", "OpCo", or "LabCo" for the primary team of founders or developers, often local to where that team is located. For example, many American founders use a Delaware C-Corp to complement their RMI DAO LLC.
A benefit of the DAO LLC is its ability to make smart contracts (e.g. tokens to track membership or governance smart contracts to handle governance decisions) legally responsible for aspects of your company.
Smart contracts are not required to be used in any way.
Many DAO LLCs choose to start out with a structure similar to a traditional LLC (tracking membership on paper and making governance decisions off-chain) and then later transition to using tokens and other smart contracts when they are ready.
This is especially common because projects often want to create their DAO LLC before launching a token or other smart contracts so that those actions are covered by the DAO LLC's liability shield.
If there is a discrepancy between a smart contract and the operating agreement (e.g., one says a particular decision was made, and the other says otherwise), the operating agreement supersedes the smart contract, because the operating agreement is the source of truth for the organization and must define how smart contracts are involved.
DAO LLCs often choose to write their operating agreement in such a way that all membership and/or governance decisions are completely delegated to the smart contracts, such that a relevant conflict cannot occur.
Whenever any organization pays or grants money, it has to follow any filing requirements that might exist in the local jurisdiction of the receiving person or entity.
There is no filing requirement in the Marshall Islands when DAO LLCs make payments or grants to other people or entities.
DAO LLC can enter into contracts just like regular LLCs can. As long as there is no specific reason why the service provider chooses not to do business with a DAO LLC, DAO LLCs may enter into contracts and other agreements with any other parties.
Yes, other entities, companies, etc, can be Founders and Members of DAO LLCs.
Yes, DAO LLCs can invest in or otherwise own shares or governance rights in other companies.
And, yes, a DAO LLC can fully own a subsidiary company.
Note that if a company is a Member that would otherwise KYC (see KYC requirements ), that company then must perform KYB, which includes KYC on any of that company's beneficial owners.
MIDAO always recommends hiring a lawyer, and this is especially true if you want to create a Master-Series DAO LLC, given the complexity of the legal documents required to create and operate one.
The main benefit of a Master-Series DAO LLC is that assets, liabilities, membership, and other operational issues can be kept separate between the different Series.
Note that not every jurisdiction and court in the world recognizes the separation of assets and liabilities between the Series, so it's important to seek legal advice regarding the risks involved and to ensure the Master-Series is operated properly to mitigate those risks.
The way a Master-Series DAO LLC works is that you register a Master DAO LLC with MIDAO, then the Master independently creates individual Series within it.
Once a Master DAO LLC is created, it can be extremely quick and easy to spin up Series within it, as no additional filings with MIDAO or the Marshall Islands are required to create each Series.
You can create as many Series DAO LLCs as you want within a Master DAO LLC.
DAOs with sub-DAOs can utilize a Master DAO LLC with Series DAO LLCs within the Master for each sub-DAO
Investment companies wishing to separate various investment portfolios into individual Series within a Master.
NFT projects wishing to separate assets and liabilities between different collectiosn of NFTs.
Incubators wishing to provide "starter" legal entities for projects going through their incubator.
From MIDAO and the Marshall Islands government's perspective, Compliance, Beneficial Ownership reporting, and KYC is conducted only on the Master DAO LLC, not each individual Series within it.
While there are good use cases for Series LLCs and Series DAO LLCs, MIDAO does not recommend purchasing Series LLCs from third-party providers who control the Master LLC. As a result, RMI Series DAO LLCs are not available in that context. Read more about that issue .
RMI Series DAO LLCs are just like Series LLCs, but with all . If you're not familiar with Series LLCs, check out .
Read more about Compliance, Beneficial Owners, and KYC for DAO LLCs .
Note that the RMI DAO LLC Registry is separate from the IRI Registry for traditional (non-DAO LLC) companies registered in the RMI.
MIDAO can also provide certified or notarized documents as needed proving that a DAO LLC is registered, such as Certificates of Good Standing, Certificates of Incumbency, etc.
MIDAO provides registration numbers when delivering your charter and registered documents in the cover letter. If you can’t find your number, please contact our team!
Some clients like to make their formational documents as public as possible by sharing them with their network; and are some examples that come to mind. Otherwise, your registration documents will remain private except in case of a valid law enforcement investigation.
Any DAO LLC's registration number can be verified on the .
DAO LLCs can reserve their name when registering or can optionally reserve a name pre-registration for six months for a deposit of $1,000 USD.
Every DAO LLC must have “DAO LLC” at the end of the entity name. Some DAOs prefer not to leave a space between the end of the DAO name and the start of DAO LLC, which is also acceptable. For example: “MIDAO LLC” vs. “MI DAO LLC.”
You can "DBA" or “Do Business As” a different name, or “trade as” any name you want. It is up to the DAO LLC to ensure that its legal name is used in legal documents/agreements when appropriate or necessary for the situation.
DAO LLCs may choose to leverage the services of a corporate service provider to act as Members or Managers of their DAO LLC.
This approach can provide for a similar function as independent directors in a Cayman or other Foundation, separting founders or others involved in a project from the management of the DAO LLC.
MIDAO does not provide management or nominee services. See our Partners, Lawyers and Vouchers page or contact us for introductions to such corporate service providers.
The DAO Act states that "all digital assets including non-fungible tokens issued, sold or transferred by a non-profit DAO LLC to its members or in advancing its non-profit purpose shall not be deemed a digital security".
The DAO Act also states that "a governance token conferring no economic rights shall not be deemed a security".
These carve-outs can help Non-Profit DAO LLCs or any DAO LLC token with no economic rights get their tokens listed on centralized exchanges, which often ask for a legal opinion on whether the token is a security in the company's local jurisdiction or in other situations where the token's security status in its home jurisdictions is relevant.
Just because a DAO LLC is for-profit and has tokens that confer economic rights does not automatically make its tokens securities, but the tokens are not automatically considered not securities by the Marshall Islands either.
Either way, RMI securities laws do not apply to your DAO LLC as long as you are not selling tokens in the Marshall Islands (see below).
The DAO Act states that "To the extent that a DAO LLC is not, directly or indirectly, issuing, selling, exchanging or transferring any digital securities as defined in Section 102 of the Securities and Investment Act to residents of the Republic, the provisions of the Securities and Investment Act shall not apply to DAO LLCs".
This means that, as long as you do not sell your token to residents of the Marshall Islands, you do not have to follow Marshall Islands securities laws.
Keep in mind that most countries' securities laws apply to any company domiciled anywhere in the world when it sells in that country. For example, when selling something in the United States that the US considers a security, you have to follow US securities laws.
Other than that, DAO LLCs are allowed to launch and use tokens for any otherwise-legal purpose.
The only law that mentions tokens other than DAO LLC-related laws does so in the context of VASPs, which are not allowed in the Marshall Islands but are also defined more narrowly than in some other jurisdictions. See more about VASPs .
KYC refers to identity verification and background checks conducted on individuals. KYB refers to when the verification is done on companies.
KYC/KYB reporting, verification, and background checks are done at the time of registration and each year during annual filings.
The following are the requirements for who must complete KYC/KYB:
Category A: Any person or company that owns 25% or more of the governance rights of a DAO LLC. These are considered beneficial owners of the DAO LLC for compliance purposes.
Category B: If no one is in Category A, then all managers (if any, since it is optional to have managers). These are considered beneficial owners of the DAO LLC for compliance purposes.
Category C: If no one is in Category A or B, then any member of the DAO LLC. This member is not considered a beneficial owner but must still be listed on the Beneficial Owner Information Report form and conduct KYC/KYB.
If a company is the legal person fitting into Categories A, B, or C, then its ultimate beneficial owners (natural persons) must also perform KYC as part of the KYB process.
The BOIR requires similar reporting to the above KYC/KYB requirement, except that:
For Categories A or B (see above), the ultimate beneficial owners of any entities must be listed rather than the entities themselves, i.e. the natural persons (not companies) that have ultimate control over the entities falling into the categories.
Whether or not natural persons are considered "owners" of those entities, they may be considered beneficial owners for compliance purposes. For example, a non-profit entity may not have "owners" but still has beneficial owners for compliance purposes. Similarly, if managers, officers, directors, or trustees are ultimately in control of those entities, they are considered beneficial owners for compliance purposes, even if they are not owners of those entities.
To complete KYC, each individual must prove liveness and have a valid passport and proof of residency (utility bill, internet bill, or bank statement).
To complete KYB, a company must provide various documents proving its legitimacy, good standing, beneficial ownership, etc.
The Marshall Islands follows United States (e.g. OFAC) and United Nations sanctions requirements when determining whether to accept an individual or company performing KYC.
This, for example, prohibits registrations by residents (but not always unsanctioned citizens) of countries and regions of Iran, Syria, Cuba, North Korea, Russia, and the Crimea, Donetsk, and Luhansk regions of Ukraine.
The KYC/KYB process also reviews international criminal, politically exposed person, and adverse media databases.
MIDAO and the Marshall Islands Government will only share information provided through KYC, KYB, and Beneficial Owner Reporting as part of valid law enforcement requests, as determined by the Attorney General or Courts of the Marshall Islands.
The is submitted as part of a DAO LLC's registration and annual filing process.
KYC/KYB is completed by our third-party KYC provider, . Synaps is based in Europe and is subject to the GDPR (General Data Protection Regulation) to protect your data.
More information on the OFAC list can be found .
To paraphrase, VASPs are defined as organizations that custody or transfer digital assets that belong to others or on behalf of others.
Note that launching a token, holding tokens, trading tokens, and otherwise using tokens does not make a DAO LLC a VASP; it's only when a DAO LLC does these things "for or on behalf of" another party.
This is different from some other jurisdictions, where simply launching or holding tokens can make you a VASP.
Banking Act 1987 (RMI), Chapter 1, §102(ii) provides that a ‘virtual asset service provider‛ means any natural or legal person, other than a bank, who, as a business, conducts one or more of the following activities or operations for or on behalf of another natural or legal person:
(i) exchange between virtual assets and fiat currencies;
(ii) exchange between one or more forms of virtual assets;
(iii) transfer of virtual assets (i.e., conducting a transaction on behalf of another natural or legal person that moves a virtual asset from one virtual asset address or account to another);
(iv) safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and
(v) participation in and provision of financial services related to an issuer's offer and/or sale of a virtual asset;
While the Banking Act provides that a VASP may operate with a valid license from the Banking Commissioner, such licenses are not currently available, effectively making it illegal to operate a VASP (as defined above) in the Marshall Islands.
Note that doing any of the above activities with non-virtual assets would make a DAO LLC a financial service provider and also require a license from the Banking Commissioner. For example, operating a bank or exchange would require such a license.
There are several RWA-related DAO LLCs in the RMI, but they operate so that the DAO LLC itself does not custody RWAs that belong to other people. Rather, the DAO LLC must be the owner of the assets, and then other people can own the DAO LLC. The DAO LLC cannot own financial RWAs and then give people tokens that represent ownership of those assets directly because then the DAO LLC is considered to be in the custody of those financial assets on behalf of others and be considered a VASP in the RMI. Here are some structures RWA-related DAO LLCs have opted for that do not make them a VASP:
The DAO LLC builds a protocol for people and organizations to put up RWAs to create tokens, which are then held by others. These holders will get a return based on the return on the RWA.
The DAO LLC does not own the RWAs; rather, it facilitates other legal entities (e.g., other LLCs elsewhere in the world) that actually own the RWAs. These other entities are often optimal for the RWA in question, for example, an LLC in California that owns real estate in California.
The DAO LLC does own the RWAs, and its tokenholders are owners of the whole DAO LLC, as opposed to the DAO LLC separately managing and custodying RWAs with different tokens representing ownership of each.
The DAO LLC creates individual Series DAO LLCs within the Master, each of which would own an RWA or portfolio of RWAs, and then each Series could also have its own token holder structure, such that the tokenholders would be the owners of that individual Series. This way, the tokenholders do own the Series directly, rather than the DAO LLC being in a custody situation.
Yes, a DAO LLC can operate a front end for a protocol without being considered a VASP.
Yes, a DAO LLC can develop, govern, and market protocols without being considered to be doing the activity that is undertaken by the protocol; therefore developing, governing, and marketing a protocol does not make a DAO LLC a VASP in the Marshall Islands.
Here is the exact definition from the
For-Profit DAO LLCs in the Marshall Islands must pay a 3% gross revenue tax. The GRT is a tax on top-line revenue but does not apply to capital gains, dividends, or invested capital.
Members of LLCs, including the For-Profit DAO LLC, usually have pass-through taxes in their own tax jurisdictions (e.g. the IRS for US Citizens) on the company's income. Please consult a local tax advisor to understand your potential pass-through tax implications.
These taxes can be paid to MIDAO in most popular cryptocurrencies, which are then converted and sent to the Marshall Islands government as fiat dollars.
Marshall Islands DAO LLCs complete annual filings and pay annual fees every January.
Annual filings are completed through a digital portal and include the following steps:
Submit the most recent version of their Operating Agreement (if updated).
If there are changes to who is listed on the BOIR form, the new natural or legal persons (i.e. companies) listed in the report must complete KYC/KYB.
Complete the , and verify the company's treasury and funding amount (which determines the annual fee level).
Submit a .
Learn more about beneficial ownership reporting and KYC/KYB .
Submit a (if the Representative Agent needs to be updated).
Submit the .
If the DAO is for-profit, it must also report its revenue for tax purposes and pay its .
Overview of Process
For a name change, MIDAO will need the DAO LLC to complete, sign, and send:
Amendment to Certificate of Formation
Amendment to Operating Agreement
New Operating Agreement reflecting the Amendment
New Certificate of Formation reflecting the Amendment
Complete CF Amendment
Complete OA Amendment
Submit an Amended OA
Amend and sign the current DAO LLC's OA with the name changed throughout
Submit an Amended CF
Amend and sign the current DAO LLC's CF with the name changed throughout
Submit an Amended FIBL
Amend and sign the current DAO LLC's CF with the name changed throughout
MIDAO Sends Documents to the Government for Review
MIDAO’s Operations team will send all documents to the government
Confirm Successful Change
The government will let MIDAO know the results; MIDAO will pass on to the client
MIDAO Updates Information
MIDAO will add name change docs to the customer’s files for archival purposes, update the public-facing registry, any records on file, and information stored in the DAO LLC's annual filing portal.
Keep in mind that every provider decides independently how to conduct their compliance process. Each provider may ask for different documents, use different names for them, accept different things as adequate submissions, define terms differently, etc. You often have to get creative, be persistent, communicate with the provider, and try multiple submissions before you pass KYB.
Formational Documents
Providers will usually require you to submit your formational documents and may ask for certified or notarized copies of certain documents (such as a Certificate of Good Standing or Certificate of Incumbency) which MIDAO can provide to you.
Certificate of Formation: this is the DAO LLC's formational document and is equivalent to what a provider might call a "certificate of incorporation" or something else.
Operating Agreement: this is the DAO LLC's governing document and is equivalent to what a provider might call "bylaws," "memorandum of association," "articles of association," or something else.
Registered or Official Address
Every Marshall Islands DAO LLC's official registered address is:
[DAO LLC Name], 852 Lagoon Rd., Majuro, Marshall Islands MH 96960
Operating Address
Providers will often ask for proof of an operating address, i.e., a place where someone at the company physically operates. While MIDAO provides you with an official, registered address for your company (see above), we cannot, by its definition, provide you with an operating address.
The operating address will usually need to be accompanied by a utility bill (either in the company's name or in the name of the person using their personal address).
You may need to get in touch with the provider to figure out what will be acceptable to them if your organization does not have a physical office somewhere.
List of Members
Providers may use different terminologies for members, such as shareholders or owners, even though many corporate types do not have shareholders or owners. For example, DAO LLCs, like other LLCs, technically have "members," not "shareholders," and non-profit companies usually have no "owners" but are still expected to answer the question.
If your DAO LLC keeps a full list of its members in its Operating Agreement, submitting the Operating Agreement (or the relevant pages of it) may suffice.
If your DAO LLC uses a token or multi-sig to track membership, be prepared to get creative or communicate with the provider to figure out how to pass KYB.
Sometimes, a provider will require or otherwise accept a separate list of members, such as a list on company letterhead signed by an authorized person.
List of Managers
Providers may use different terminologies for managers, such as directors, officers, board members, etc., even though many corporate types do not have such titles. For example, DAO LLCs, like other LLCs, technically have "managing members," not "directors" or "officers," and will be expected to submit a list of their managers.
If your DAO LLC keeps a full list of its managers in its Operating Agreement, submitting the Operating Agreement (or the relevant pages of it) may suffice.
If your DAO LLC uses a token or multi-sig to track its managers, be prepared to get creative or communicate with the provider to figure out how to pass KYB.
Sometimes the provider will require or otherwise accept a separate list of managers, for example, a list on company letterhead signed by an authorized person.
List or Proof of Beneficial Ownership
Note that every provider (and country) defines beneficial ownership differently. While it's possible a provider will ask for your beneficial ownership as defined by your local jurisdiction (the Marshall Islands), it's more likely they will have their own definition you have to follow.
Note that this might mean that you have to say someone is a beneficial owner during your KYB process with the provider, even if that person is not considered a beneficial owner by MIDAO or the Marshall Islands.
MIDAO can provide a certified Certificate of Incumbency showing your beneficial ownership (as defined by the Marshall Islands for DAO LLCs) based on your DAO LLC's latest government filings. Depending on the provider's compliance policy, submitting this document to the provider may or may not suffice as proof of beneficial ownership.
MIDAO can also provide a certified Beneficial Owners Information Report (BOIR), which DAO LLCs are required to submit to MIDAO when creating a DAO LLC and every year during annual filings. Depending on the provider's compliance policy, submitting this document to the provider may or may not suffice as proof of beneficial ownership.
If your DAO LLC keeps a full list of its members, managers (if any), and membership interest (i.e. voting or ownership rights) in its Operating Agreement, submitting the Operating Agreement (or the relevant pages of it) may suffice as proof of beneficial ownership.
If your DAO LLC uses a token or multi-sig to track its members and their voting or ownership rights, be prepared to get creative or communicate with the provider to figure out how to prove beneficial ownership.
Sometimes a provider will require or otherwise accept a separate list of beneficial owners, for example, a list on company letterhead signed by an authorized person.
Financial Information
Providers will often ask for your source or use of funds, or for other financial information.
Obtaining a bank account as an entity dealing with crypto in any way can be difficult, which is why MIDAO has partnered with the following crypto-friendly banks and neo-banks (fintech companies).
Several DAO LLCs have also opened bank accounts with traditional local banks, such as Western Alliance and Signature.
MIDAO has also partnered with banking service providers that can get you a bank account for a fee in various jurisdictions of your choosing.
If you do not have any managers (since the DAO LLC makes it optional to have managers), you will have to consider whether to to elect managers or contact the provider to try to find a way to pass KYB without managers.
– Stablecoin-powered business banking with USD & EUR accounts, ACH/Fedwire/SWIFT/SEPA transfers, and balances backed 1-for-1 by U.S. Treasuries. Offering cards now, too.
– “On-chain bank account” offering a single API for fiat ↔ stablecoin on/off-ramps across 50+ countries and multi-currency accounts.
– Startup-friendly USD checking with enhanced FDIC coverage, unlimited cash-back virtual & physical cards, plus built-in USDC/USDT payments.
– Neo-bank for Web3 firms: multi-currency accounts, ACH/wires & FX, and instant crypto-fiat conversion in one dashboard. Just started offering a new "Stables Account."
– Non-custodial Swiss platform letting DAOs and Web3 businesses pay anyone in USD, EUR, GBP, CHF, or SGD using stablecoins—no traditional bank required.
– Licensed Swiss crypto bank with multi-currency accounts, trading/custody, and interest-earning USDC/EURC “Stablecoin Rewards.”
– Developer APIs for issuing and moving stablecoins; fiat↔stablecoin rails that power Visa & Wirex cards and process $10 B+ annually.
If you’d like an introduction to any of MIDAO's partners, please contact .
If you’d like an introduction to any of MIDAO's partners, please contact .
Any regular corporate matters, such as a name change or dissolution of the DAO LLC, are included in our annual fees; there is no additional cost.
Please provide evidence that the dissolution process or event contained in the DAO LLC's Operating Agreement or Certification of Formation, as appropriate, has been followed or that a ⅔ majority has approved dissolving the DAO LLC.
The appropriate processes in the Non-Profit and For-Profit laws must be followed if assets are held.
MIDAO will submit the Dissolution Form and dissolution documents to the Registrar of Corporations.
Dissolution documents will be submitted in person to the Registrar of Corporations, who will verify and determine your dissolution as a final step.
Please complete the to start the dissolution process following
These are required under Section 225 of the , titled “Voluntary Dissolution,” and Section 46 of the , titled “Dissolution.”
Non-Profit DAO LLCs - Refer to Section 228 of the as a guideline for distributing assets. There is a 3-year period following dissolution to do so.
For-Profit DAO LLCs - Refer to Section 49 of the as a guideline for distributing assets.
Admiralty DAO (Clipper DEX)
Elastos DAO
Nest DAO (Plume Network)
Moon DAO
Teia DAO
Reputation DAO (Talent Protocol)
Dope Wars DAO
Gnosis Guild DAO
Ape Coin Governance DAO
Pyth Network DAO
Meta DAO
GMX Governance DAO
Idle DAO
Grape DAO
Ranch DAO
Layer 2 DAO
Citadel DAO
Duck DAO
Based VC DAO
If you want to verify whether a DAO LLC is registered in the Marshall Islands, visit the MIDAO Registry .
This law was the first Web3 & DAO law in the Marshall Islands, which created Non-Profit DAO LLCs and removed requirements such as knowing the names and addresses of all members, having managers, and having to get a local bank account.
This law introduced For-Profit DAO LLCs and added clarity around the application of laws such as the Income Tax Act, Securities Act, and other RMI Laws.
This regulation simplified and clarified the registration process (and related forms) for DAO LLCs in the Marshall Islands.
Note that not all of the language of these corporate laws applies, as it is modified by the above DAO LLC related laws.
Note that the Nitijela website's content library is out of date; please contact MIDAO for the latest copies of any laws or regulations.
All the DAO LLC related laws build on the Delaware-based corporate law system of the Marshall Islands, most of which can be found provided by IRI, the RMI offshore registry for companies other than DAO LLCs.
The Banking Act Amendment of 2020 introduced the definition of a VASP and required licenses for VASPs (e.g. exchanges and banks) wishing to domicile in the Marshall Islands. These licenses are not currently available. Read more .
To MIDAO's knowledge, no RMI DAO LLC has yet sued or been sued in the Marshall Islands or elsewhere.
However, thanks to the history of the Marshall Islands being a leading jurisdiction in the shipping industry, there is strong precedent and confidence in the country's legal system.
The Marshall Islands courts will also look to Delaware corporate litigation precedent to influence decisions when it does not conflict with existing Marshall Islands law or precedent.
As the sole registered agent for DAO LLCs in the Marshall Islands, MIDAO has worked with several hundred Web3 projects and DAOs, as well as hundreds of lawyers. Our goal is to leverage this experience to provide you with information to help you make decisions about your project. We also provide our clients with template documents to assist them in the formation of their entity.
That said, please remember:
MIDAO Global, Inc. and MIDAO Directory Services, Inc., collectively known as MIDAO, are not law firms and do not provide legal services or advice.
MIDAO recommends seeking independent legal advice regarding all decisions regarding Marshall Islands legal entities and any related legal matters.
A qualified attorney can provide tailored advice to ensure compliance with applicable laws and regulations in the Marshall Islands and any jurisdiction where you have founders & members, sell tokens, or conduct any other operations. Your attorney can help to protect your interests and facilitate informed decision-making in complex legal landscapes.
You are solely responsible for obtaining tax, regulatory, and legal advice regarding your personal affairs and the activities of your organization.
It is your responsibility to ensure that your organization’s activities comply with the laws of all relevant jurisdictions.
Prospective and current MIDAO clients, please also see our for further disclaimers.
Whether a bank or other provider will open an account for a DAO LLC depends on many factors including:
Whether the provider supports Marshall Islands companies (ask them before applying!)
The membership and management structure of your DAO LLC, which is up to you and determined by how you write your .
For example, some banks may not be OK with companies using a token to track membership, even though it's totally acceptable in the Marshall Islands.
The citizenship and residency of the DAO LLC's beneficial owners and their ability to pass KYC.
Note that every provider defines beneficial ownership differently, and their definition may vary from MIDAO's .
The DAO LLC's source and use of funds.
Where the DAO LLC and its members physically operate and whether an acceptable proof of address (usually a bank or utility statement) is available for those locations.
Whether a bank or other provider will open an account for a DAO LLC depends on many factors including:
Whether the provider supports Marshall Islands companies (ask them before applying!)
The membership and management structure of your DAO LLC, which is up to you and determined by how you write your .
For example, some banks may not be OK with companies using a token to track membership, even though it's totally acceptable in the Marshall Islands.
The citizenship and residency of the DAO LLC's beneficial owners and their ability to pass KYC.
Note that every provider defines beneficial ownership differently, and their definition may vary from MIDAO's .
The DAO LLC's source and use of funds.
Where the DAO LLC and its members physically operate and whether an acceptable proof of address (usually a bank or utility statement) is available for those locations.