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MARSHALL ISLANDS EMERGES AS A GLOBAL LEADER IN KYC PROCEDURES FOR DAOs: A GUIDE TO KNOW YOUR CUSTOMER COMPLIANCE
The Republic of Marshall Islands (RMI) has taken a significant step towards becoming a global hub for Decentralized Autonomous Organizations (DAOs), introducing the Marshall Islands DAO LLC legal structure. This innovative model offers numerous benefits, including limited liability, corporate personhood, and permission to maintain records on the blockchain.
KYC PROCEDURES: A COMPLIANCE REQUIREMENT FOR DAO MEMBERS
For DAO members holding 25% or more governance rights in Marshall Islands DAO LLCs, completing Know Your Customer (KYC) procedures is a regulatory requirement. This involves providing real name, address, and passport information to the RMI authorities.
What does KYC involve?
- Providing real name
- Address
- Passport information
DIGITAL ASSET REGULATIONS: A FAVORABLE ENVIRONMENT FOR DAOs
The RMI has taken a proactive approach to digital asset regulations, with no laws or regulations currently in place except for companies that engage in digital asset custody. The government plans to introduce innovative legislation and regulation over time, making it an attractive destination for DAOs.
Benefits of doing business in the Marshall Islands
- No existing laws or regulations
- Proactive approach to innovation and regulation
BANKING FOR DAOs: A SUCCESSFUL EXPERIENCE
Marshall Islands DAO LLCs have successfully opened bank accounts with several financial institutions, demonstrating the jurisdiction’s commitment to providing a compliant and supportive environment for DAOs.
Successful banking experiences
- Several financial institutions have provided banking services to Marshall Islands DAO LLCs
ANNUAL REPORTING AND COMPLIANCE
RMI DAO LLCs are required to report annually by updating their company agreement and having beneficial members complete KYC procedures. For-profit entities must also report revenue for tax collection purposes.
Compliance requirements
- Annual reporting
- Updating company agreement
- Beneficial member KYC procedures
- Revenue reporting (for-profit entities)
THE RMI’S COMMITMENT TO COMPLIANCE
The Marshall Islands has demonstrated its commitment to international standards regarding beneficial ownership, anti-money laundering (AML), and countering the financing of terrorism (CFT). The jurisdiction is not part of any blacklists or tax evasion lists.
International compliance
- Beneficial ownership
- Anti-money laundering (AML)
- Countering the financing of terrorism (CFT)
CONCLUSION
The Marshall Islands’ innovative legal structure for DAOs offers a unique opportunity for organizations seeking a compliant and supportive environment. With its favorable regulatory framework, KYC procedures in place, and successful banking experiences, the RMI has established itself as a global leader in DAO compliance.