Decentralized Autonomous Organizations (DAOs) governed by blockchain principles are gaining popularity due to their transparency, democracy, and potential for innovation. But regardless of how powerful and promising they may be, DAOs face legal and regulatory challenges.
One of the first questions when planning a DAO project is which jurisdiction to choose for registration.
In 2023, the most popular countries for DAO registration are the Marshall Islands, USA (state of Wyoming), Switzerland, the Cayman Islands, Liechtenstein, Singapore, and Panama.
Each jurisdiction has its characteristics, so choosing a place to register a DAO requires a careful approach. We have compiled a small checklist of aspects that are worth paying attention to:
Do you plan to generate profits and distribute them among DAO members?
If so, consider creating a “profitable” DAO.
Profitable DAOs are registered in the form of:
foundations following the legislation of Liechtenstein (Liechtenstein Foundations) or the legislation of Panama (Panama Foundations)
limited liability companies (LLCs) under the legislation of Wyoming (Wyoming DAO LLCs) or Marshall Islands (Marshall Islands DAO LLCs)
Non-profit DAOs are often registered in the form of:
foundations/associations under Swiss legislation (Swiss Foundations/associations) and/or under Cayman Islands legislation(Cayman Islands Foundations)
Marshall Islands Non-Profit DAO LLCs
2. What level of decentralization should your DAO have?
Some countries offer more flexibility in implementing decentralized governance structures, while others are strict about governing bodies and voting procedures.
Among the less decentralized options for DAOs in the form of statutory funds are:
Switzerland (Swiss Foundation)
Liechtenstein (Liechtenstein Foundation)
of Singapore (Singapore Foundation)
More decentralized options include DAO registration in the form of:
Wyoming DAO LLCs
Marshall Islands DAO LLCs
in the form of funds under the legislation of the Cayman Islands (Cayman Islands Foundation)
3. Is a public token sale possible?
For example, in Singapore and the US (state of Wyoming), a public sale will require obtaining a license that the company is a virtual asset service provider. In the Marshall Islands and Panama, such a permit is not required.
4. Are know-your-customer (KYC) standards and keeping a register of DAO members necessary?
Liechtenstein, Singapore, and the Cayman Islands have high KYC standards. Panama and the Marshall Islands are much more lenient on KYC, and some do not require KYC checks.
It is only a basic set of criteria that should be considered when choosing a place for DAO registration. We have prepared a detailed overview of the jurisdictions in the table below.
Registering a DAO is difficult and requires detailed understanding and a careful approach. Choosing the proper jurisdiction can be crucial to the success of the project.
If you want to create your own DAO, do not hesitate to contact us for advice. Our company is ready to provide a full range of services for DAO projects: choosing the optimal jurisdiction, registration, and project support.