#10 - The Crypto Islands

[00:00:00] Balaji: Welcome to a new episode of the Network State Podcast. Today, I’m here with Senator and a minister from the Marshall Islands, as well as an entrepreneur who’s helped go and get their new crypto law up and running. It’s a DAO law that allows you to essentially build an interface between an on chain entity and, uh, you know, the off chain legal system.

[00:00:19] Balaji: Uh, I made a small investment in this company, MyDAO. That’s kind of a agent that’ll help you get set up, but they’ve been operating under their own power for a while. They’ve set up more than 100 DAOs in the Marshall Islands. And with me today is Adam Miller, uh, Minister Joe Bejong, and Senator David Paul, all of, uh, the Marshall Islands, and they’re going to talk to us today about the, uh, the new Marshall Islands DAO law.

[00:00:40] Balaji: So, uh, Minister, Senator, Adam, let’s go.

[00:00:44] David Paul: Yeah, sure,

[00:00:44] Minister: uh, yeah, wait. My name is, uh, Joe Bejong, and I’m the newly appointed, uh, Minister of Justice, Immigration, and Labor here in the

[00:00:52] David Paul: Marshall Islands. My name is David Paul. I am the current chairman for the Uh,

[00:00:59] Balaji: [00:01:00] appropriation committee. We also have here, Adam Miller and, uh, Adam, can you introduce yourselves?

[00:01:05] Balaji: Yeah.

[00:01:06] Adam Miller: Hey everyone. My name’s Adam Miller and I’ve been into crypto and web three for a while, but DAOs are really my gem. You know, I really believe that DAOs are going to change the way we organize everything on earth, people, resources. And so my mission in life now is to help bring DAOs to the world.

[00:01:22] Adam Miller: And the way I’m doing that today is collaborating with the government of the Marshall Islands to create web three and DAO. legal and regulatory frameworks that are better than what exists everywhere else in the world.

[00:01:35] Balaji: Yes. Awesome. And that’s why we’re actually here today because, um, there’s a number of, uh, crypto entrepreneurs, founders, investors who are, uh, looking for, uh, good jurisdictions to operate.

[00:01:47] Balaji: And the Martial Islands has set up a new law that may make it actually very competitive. Um, so, you know, just before we get there, maybe we can just put the Martial Islands on the map, kind of help people know where it is. So it’s located in the Pacific. Uh, [00:02:00] maybe we could put up a map on screen. Great. And Sender, you know, Minister, do you want to talk about the Martial Islands, tell people who’ve never been there what it’s all about?

[00:02:07] Balaji: The Martial Islands

[00:02:08] David Paul: is located like 2, 400 mile southwest of Hawaii and is right in the middle between Hawaii and Australia. The Marshall Islands is close to about a million square kilometers of ocean territory. The land mass is only the size of Washington, D. C. So, you can imagine. It’s, we’re, we’re, uh, we, we maybe call a small island nation, but we’re a big ocean state.

[00:02:39] David Paul: You know, it’s tropical all year round and, you know, the Marshall Islands has Over 24 atolls within the Marshall Islands, the jurisdiction of the Marshall Islands. And the population is around, uh, in countries maybe around 43, 000. But total Marshallese globally, I would say [00:03:00] over 80, 000. So it’s a very small country.

[00:03:04] David Paul: And, uh, is in, you know, close and freely associated states with the United States. An independent country. But enclosed and free associated with the United

[00:03:13] Balaji: States. And, you know, that million miles of ocean, uh, puts you near, you know, several other Pacific islands, like, uh, Palau, I think is nearby, Micronesia, right?

[00:03:26] Balaji: And then some of the other Pacific islands that are also independent states are your neighbors. That’s good also to look at it between Hawaii and Australia. The thing is, as a full sovereign state, as a UN member, uh, you can set your own policies. You have, uh, passed a new law. That law is potentially quite interesting for crypto folks around the world.

[00:03:45] Balaji: The, the new Marshall Islands DAO law, uh, and maybe Adam, uh, or, or Sender, maybe you can kind of talk about this, tell us what it’s about at a high level.

[00:03:54] David Paul: I’ll, I’ll just kick it off and then I’ll invite the minister to make a comments and then I’ll have Adam to. [00:04:00] You know, expound on on it. But basically, back in 2022, we enacted what we call the Decentralized Autonomous Organization Act of 2022, which is the dialogue.

[00:04:12] David Paul: We call it a dialogue. I mean, RMI is not no stranger to to the Web 3 initiative back in 2017 or 2018. Sorry, we the Parliament actually passed the first ever, uh, soft, the soft legislation, which is make Soft as the soft means sovereign as the, uh, legal tender for the Marshall Islands as a cryptocurrency.

[00:04:41] David Paul: Now, the law is still in the books, but we have not yet implemented because of many regulatory implementation challenges. We thought that, uh, the The passage of these, the soft law taught us so much about crypto, the web three and all of that. You can imagine during that time [00:05:00] when, when we were passing it, people were actually Googling what is cryptocurrency in real time.

[00:05:07] David Paul: While we were having a national debate on the floor of the parliament and people were basically Googling and trying to understand and try to understand what does cryptocurrency means. And it was a very profound moment in the history of the country because, you know, everybody was just trying to understand what does the, uh, the blockchain technology is all about.

[00:05:27] David Paul: And then here we were at that time passing the legislation. And my God, when we passed it, we got so much criticism from like the, the likes of the world bank, the IMF, the Asian development bank, even the United States treasury. They, they thought that we were like, you know, we went rogue basically. They thought that we, we were, we’re losing our minds.

[00:05:49] David Paul: We were losing on grip on reality, but for us at the time we said, no, we, we knew that was the future. Now, fast forward to today, when we [00:06:00] went, we went back to the United, uh, the world bank, uh, last year in October, the only thing that they were talking about was digital currency. You know, it was easy, you know, three years later, four years later.

[00:06:14] David Paul: People were now talking about, you know, staple coin, digital currency, not so much crypto, but I mean, yeah, it’s within the same, uh, ecosystem, right? But the fact that we were ridiculed, we, they thought that we were crazy, but now everybody’s talking about it’s now become part of the mainstream. So that’s why we have, we have, I vote for the, for the autonomy, the decentralized autonomous organization act of 2022, and we’re going to build on it.

[00:06:40] David Paul: But. The reason why the, the Minister of Justice is part of this, is because he’s the one that is actually enforcing

[00:06:47] Balaji: this thing. Well, first of all, that’s awesome. And can you tell us, uh, you know, the, so law was 2018, is that right? So, stands for store of value or, or so, uh, can you tell, tell us what that was?

[00:06:59] Balaji: That was like a [00:07:00] billing block for the, the Dow law that you’ve just passed.

[00:07:03] David Paul: The SAB is, is, uh, is, is Unredeemable. It’s unredeemable, but it’s also, uh, legal tender in the Marcal Islands. There’s nothing backing it up is basically the, the, the perceived value of it. And it actually, the, what really actually, uh, gave value to it is actually the technology behind it.

[00:07:26] David Paul: That’s just, so that’s how the soft concept came about. So we didn’t want it to make it as if there was a, if it was redeemable, because, you know, like the dollar is not redeemable. So we wanted to make sure that it is no different than any other currencies of the world. You know, so, so we were not far from, you know, what other countries that have their own old currency were doing.

[00:07:51] David Paul: But it was actually in a digital format, so

[00:07:54] Balaji: to speak. Very interesting. So basically you’re very, one of the very first to do that. And, you know, [00:08:00] El Salvador and, you know, US states like Wyoming and Tennessee and so on have also passed, you know, cryptocurrency and, and Dow, uh, related laws. So that’s actually happened after that SOB law.

[00:08:11] Balaji: And so you’re one of the first sovereigns in the world to do that. That’s really cool. So that brings us to today. I think, uh, that’s actually really awesome history. And, you know, one thing. That I was interested in is how did you have the energy to be a startup country? Because as a small country, the good thing is you’re nimble, and in theory, you can come to consensus with a relatively small number of people, you can make decisions, you can adopt new technologies.

[00:08:36] Balaji: However, you’ve also got big neighbors and you’ve got the World Bank and all these folks who will yell if you do something too interesting, right, as you mentioned. So how did you kind of get the energy to be kind of a startup country? What, how did that

[00:08:49] David Paul: happen? Like the Marsalis people, we’re navigators.

[00:08:53] Balaji: That’s cool. Yeah, you got, you are pioneers to get all the way out to the middle of the islands there, huh? Is it our DNA? That’s cool. [00:09:00] And so that’s interesting. It may be interesting for other kind of tech things in the future. I don’t know, self driving car cities or things like that. That’s actually really interesting.

[00:09:07] Balaji: I should visit, uh, actually. In fact, everybody watching this video should probably go and should they visit the Marshall islands? Yeah, absolutely. Awesome. Uh, are there cruises there? How can, how do you get there? Uh, is it plain? What, how do you, how do you travel there if you wanted to go there?

[00:09:22] Minister: Well, we have only one airline service here in the Marshall Islands, and that’s the United Airlines.

[00:09:27] Minister: Uh, you can come via that, that airline, and then visit the other outer islands with our domestic flights. Uh, we have a domestic airline, Air Marshall Islands. You could visit all these beautiful small islands on the, uh, the other smaller atolls

[00:09:42] David Paul: in the Marshall Islands.

[00:09:45] Balaji: Or by boat. Go ahead. Yeah, yes.

[00:09:48] David Paul: Hey, Eladji, uh, let me, let me tell you also something that we’re also working on that you’d be very interested to know and your audience will be, will know about this.

[00:09:56] David Paul: What we’re trying to, we’re trying to do what we call an [00:10:00] NFT of all these islands. There’s so many islands in the Mars, there’s over thousands of islands. We’re trying to do an NFT on them so we can. Uh, digitize these assets, these idle assets that are there, and we can actually, you know, put it out in the, in the web3.

[00:10:15] Balaji: Wait, so, so, uh, would you just be buying like a digital, you know, art representation, uh, art representation of the island, or would you actually be buying the island itself?

[00:10:25] David Paul: Well, not buying it, but actually leasing it.

[00:10:28] Balaji: Oh, really? That’s interesting. Wow. Okay. So you have my attention. Um, there, there’s this, uh, there’s this great site actually, which we could put up called, I think it’s like private islands online.

[00:10:42] Balaji: Let’s, you know, let’s cover the, uh, the Dow law just for a second and then come back to the private islands. Cause I’m actually interested in both. Uh, so Dow law, you guys just passed that last year, 2022. Okay. Um, Adam, you put that on screen. So tell us, uh, tell us about that.

[00:10:58] Adam Miller: Yeah, absolutely. So, [00:11:00] you know, first of all, why do laws matter in web three, right?

[00:11:04] Adam Miller: A lot of people might say, well, we’re building a censorship resistant, you know, subversive revolutionary system. And that’s fine that some people are working on that. But the fact is that most web three products and most DAOs are just trying to follow the law, right? They need the same benefits that other organizations get When they create legal entities, like the protection from unlimited liability for their members and the ability for the project to own property, right, to own its own name, own its own logo, right.

[00:11:33] Adam Miller: And be able to assert those property rights. So dows and web three projects need those things too. The problem with legacy laws. Almost every law everywhere in the world, relating to legal entities, require organizations to do things that no DAO wants to do, and no Web3 project wants to do. So that’s things like requiring all of the members to disclose their real names and physical addresses.

[00:11:55] Adam Miller: I mean, right there, you lost 95 percent of DAOs, right? If not more, they [00:12:00] require traditional boards and management teams, which usually DAOs don’t want, with some exceptions, they require paper record keeping, even if it’s like email and PDF record keeping, DAOs don’t want to do that because all the records already exist on the blockchain, right?

[00:12:14] Adam Miller: Governments are trying to enforce dated securities laws. apply concepts like traditional securities to governance tokens. And even just generally, you know, not allowing you to perform critical functions like voting and meetings on chain. So what we’ve done in collaboration with the Marshall Islands is pass this new law that you’re talking about.

[00:12:35] Adam Miller: And it starts with very basic things. And I have this up on the screen. But just defining what is a blockchain? What is a digital asset? What is a DAO? Right? So that you can then include these things in the nature of how you govern and regulate these organizations. Importantly, this clause I have up on the screen simply says that DAOs can be limited liability companies.

[00:12:57] Adam Miller: And we call them DAO LLCs, but this is the line [00:13:00] that gives DAOs all the protections that most companies get very easily by the law. This clause in the law is about management. So just saying that a, an algorithm can manage an organization instead of having a traditional management team, right? That is so powerful.

[00:13:16] Adam Miller: That’s what so many DAOs are trying to do with smart contracts. Things like a membership interest. Right. So in most DAOs and Web3 projects, there’s some kind of tokenized membership interest, whether it’s an NFT, whether it’s one person, one vote or one token, one vote, but to acknowledge in the law that you can have a governance token, right?

[00:13:34] Adam Miller: And the purpose of that governance token can be to represent your voting rights or your economic interest if it’s a for profit. In the organization, right in the project and finally rights to information. So traditional LLCs, a member or the government or anyone could come to you and say, I want a copy of all the organization’s records and you’d have to provide them with a PDF or a binder full of records.

[00:13:59] Adam Miller: And so our law [00:14:00] in this clause and others. Fixes that by saying as long as you’re keeping all of your records on an open and public blockchain, you don’t have to furnish your records in any other way. So these are just examples of some of the clauses that are in the law, but it’s just these basic things that say, look, here’s how traditional organizations did things.

[00:14:17] Adam Miller: Here’s how Web3 organizations do things, and therefore allowing those things to happen. In these new Web3 organizations? Well, I,

[00:14:27] Balaji: I love this because, uh, you know, I, I, I often talk about, you know, there’s the fiat currency, the cryptocurrency interface, uh, that turned out to be more important and profitable than anybody ever thought with the fiat currency to cryptocurrency exchange concept.

[00:14:42] Balaji: I’ve often thought, and actually we’re in the middle of this, now, that you’re gonna have. The fiat identity to crypto identity exchange. That’s kind of what, uh, Palau is doing with its rns. id or you have the fiat company to crypto company exchange or interface. And that’s kind of what you’ve set up. [00:15:00] And some other jurisdictions are exploring because.

[00:15:03] Balaji: There’s no reason to have pieces of paper represent something if you can actually have it in code. For example, if your votes can be on chain, well, they’re cryptographically signed, they’re recordable, it’s a data structure, you can program against it, and you don’t have to have just reams and reams and reams of paper.

[00:15:20] Balaji: And so this makes a ton of sense logically, and I’m really glad that there is a place that’s kind of pioneered this. And so now we can actually have an on chain representation of a company that is fully legally compliant. Yeah,

[00:15:32] Adam Miller: and not only that, but I’ll just add that DAOs are much more transparent and they have much more guaranteed compliance than traditional companies.

[00:15:39] Adam Miller: So, you know, some people might react to this the same way they react to cryptocurrencies with fear, with, oh, you know, couldn’t this be used for criminal activity, but the Marshall Islands and our company and we share the compliance obligation actually have way more visibility into all of these DAOs.

[00:15:57] Adam Miller: So it’s, it’s really a win win, right? [00:16:00] Where people get to do what they want to do on chain with these web three projects. And the government can make sure that there’s no illegal activity happening because every transaction is recorded on chain.

[00:16:11] Balaji: That’s great. Yeah. And I, I mean, the big thing about this is simply that concept of what that interface looks like and how, you know, it’s, On chain things become, uh, at first you mirror things on chain, and then the mirror becomes the primary.

[00:16:26] Balaji: It’s kind of like, you know, the New York Times for a long time obviously was just a piece of paper, right? And then they had a New York Times website, and those existed for a while. And now you could say the website is primary and the paper is very secondary. And I think you’re one of the first. To start making the on chain entity be a full companion and peer to the to the paper entity and eventually in 10 or 20 years or whoever knows and that becomes like primary.

[00:16:51] Balaji: So, uh, you know, when you pass this, uh, when you pass this in 2022 June.

[00:16:57] Adam Miller: November.

[00:16:58] Balaji: November. Okay. So just a few months [00:17:00] old, less than a year old right now. Yeah. Have you set up any entities under this structure so far?

[00:17:05] Adam Miller: Yeah. Almost a hundred entities. Oh, really?

[00:17:07] Balaji: Okay. That’s great. And what is the, uh, what’s a procedure if, if somebody were to want to go and set one up, what are the costs?

[00:17:15] Balaji: Where do they go? And so on and so forth.

[00:17:17] Adam Miller: Yeah. So, um, and I’ll, I’ll throw a slide up with some QR codes. Even, um, we have a guide to DAO incorporation. That actually not only helps you if you want to be in the Marshall Islands, but it helps you think through, should you incorporate your DAO? Should you incorporate your web three project and where, right?

[00:17:32] Adam Miller: Because every situation really is different, but if you want to register a DAO LLC in the Marshall Islands, you reach out to my DAO. It’s at my DAO. org. It’s M I D A O. org. And we can also connect you and your project with our partner network of over 300 vetted web three lawyers. And that’s actually a really common challenge that we hear projects having is finding the right Web3 lawyer with the right jurisdictional expertise, whether it’s Marshall Islands, whether it’s Europe, whether it’s United States or more than one, and the right [00:18:00] expertise to help you solve the particular challenges that you have.

[00:18:03] Adam Miller: So we can also help get people connected at no charge with, with good Web3 lawyers.

[00:18:08] Balaji: Awesome. That’s cool. And if you go back one slide, there was something on kind of the advantages of the. Marshall Islands, if you go back one, so you want, do you want to speak to this? Like, so of course, you know, crypto entrepreneurs are global.

[00:18:21] Balaji: They can go all over the world. Uh, you know, why should they go and use the Marshall Islands over, you know, came in or, or something like that? Yeah,

[00:18:29] Adam Miller: absolutely. So there are clear advantages over came in BVI, Switzerland, USA, and other jurisdictions. Um, the USA is an easy one and people who listen to your podcasts.

[00:18:40] Adam Miller: We’ll know that the USA is not a friendly jurisdiction for web three. And in fact, it’s not a friendly jurisdiction in a number of ways. Right. And so it’s almost obvious why you wouldn’t want to base your Dow or web three project in the United States. And it’s just about the fear of what the federal government is going to do.

[00:18:56] Adam Miller: Even if you have a Wyoming Dow LLC, which is a very innovative thing [00:19:00] that they’ve done very similar to what we’ve done. The problem is you’re in the United States. Um, so that’s the issue with the U. S. When it comes to every other jurisdiction in the world. So came in B. V. I. Swiss. They offer foundations and corporations and and trusts and all of these corporate structures have boards and officers.

[00:19:18] Adam Miller: And when you have boards and officers that creates it’s not only just It’s kind of against the principle of decentralization to many of us in Web3, but it creates a target for regulators and law enforcement to go after that board, right? It could be the founders. It could be some other group of people.

[00:19:33] Adam Miller: All of a sudden, you’re not really decentralized. And so you might get in more trouble with the SEC when they say, well, is there a central group of people that you’re relying on? to get a return on your investment. So there’s no DAO LLC anywhere else in the world other than the Marshall Islands and the United States.

[00:19:49] Adam Miller: Um, so if you want to be offshore and you want a DAO LLC, you have to come to the Marshall Islands. Um, and by the way, DAO LLCs are not just for DAOs. So, you know, not [00:20:00] everyone loves the term DAO and a lot of crypto projects have multiple entities, right? You might have an entity in the US, in the BVI, in the Marshall Islands.

[00:20:07] Adam Miller: Um, so any web three projects can usually take advantage of a Dow LLC as some part of their ecosystem. And that’s something we can help people think through. We’re also working on a new laws. So we’ve actually passed two laws so far in the Marshall islands. The first was actually in 2021 and the Dow act built on that.

[00:20:25] Adam Miller: We have more that we’re working on in the pipeline laws and regulations to continue to help the Marshall islands be the best place in the world and the only sovereign nation that truly recognizes the nature of Dow’s and web three.

[00:20:36] Balaji: So, you are kind of crypto first, is one way of thinking about it, and you’re not retrofitting an existing structure onto crypto, you really have thought about it from scratch to, to kind of merge with, with, uh, how DAOs actually are.

[00:20:51] Balaji: The law is meeting where the

[00:20:52] Adam Miller: projects are. You know, to your earlier point, one way of thinking about what we do is it’s a legal bridge between [00:21:00] Web 2 and Web 3, right? It’s for Web 3 projects that need to bridge over to the TradFi world, the Web 2 world. And the way we do that actually is by customizing the LLC.

[00:21:11] Adam Miller: So this, these DAO LLCs are limited liability companies that just have slightly different treatment under the law in all the ways that really matter to web three, right? Like again, not having a board, not having to keep paper records, things like that. So, so it is, uh, piggybacking on the LLC, which is the most common legal entity in the world, by far the most popular.

[00:21:33] Adam Miller: Um, and that’s because we want these DAOs to have all the same benefits to be able to open a bank account, open an exchange account. A lot of our DAOs are doing things like opening bank accounts because they might want to sponsor an event that doesn’t take crypto or get paid by a sponsor that only has fiat currency.

[00:21:49] Adam Miller: Well,

[00:21:49] Balaji: let’s talk about that for a second. So is Marshall Islands a good spot for a crypto company to open a bank account?

[00:21:56] Adam Miller: So, The Marshall Islands banks are not [00:22:00] yet open for business for web three and crypto companies. Um, and I mean, the minister could, could maybe speak to this, uh, in more detail, but Marshall Islands entities.

[00:22:09] Adam Miller: So actually, I mean, maybe the minister could talk about this, but for a long time, the Marshall Islands has been one of the most popular jurisdictions for shipping companies to register. So there are about 50 publicly traded companies on NASDAQ and New York stock exchange. That are Marshall Islands companies.

[00:22:24] Adam Miller: And so unless you’re in the shipping industry or you may have seen the Marshall Islands flag, which is on boats all over the world, um, you may not know it, but this is a tried and true destination. And so banks all over the world will accept Marshall Islands companies, including Dow LLCs to open an account.

[00:22:40] Adam Miller: Well, yeah, I mean,

[00:22:41] David Paul: the. Aram, you, you touched on the, the ship registry and the corporate registry. The banking sector in the Marshall Islands has always been opponent of anything that has to do with crypto. No, it’s no secret that, you know, once crypto or digital currencies [00:23:00] are going to be becoming a dominant force, then it will actually render these banks redundant.

[00:23:05] David Paul: Because then, because in the, the idea of digital currencies is, is peer to peer. So it will cut out the middleman, which is all the banks, because they might make money on the, on the transaction costs and fees. So they’ve always been an opponent of anything that has to do with digital currency or cryptocurrency and so forth.

[00:23:31] David Paul: So at this point in time, these established banks in the Marshall Islands, they’re, are anti, uh, crypto. Uh, or digital.

[00:23:42] Balaji: So, so does that mean that we have half of the solution working, which is the company’s solution, but the banking piece isn’t yet there, or how should we think about that?

[00:23:51] Adam Miller: No, you just have to use other banks.

[00:23:53] Adam Miller: So we have Dow, uh, LLC clients that have bank accounts in Europe, in the United States, uh, in Dubai. [00:24:00] So we, we have service providers that can help Dow’s set up bank accounts and some have just done it on their own. They just apply for an account at. Mercury or Western Alliance Bank, uh, we had, someone had an account at Signature that obviously got, got shut down.

[00:24:13] Adam Miller: So you just have to use a global banking system, even if you’re a Marshall Islands entity. Let

[00:24:19] David Paul: me also jump in on that, because if you look at the corporate registry program that we have, we do have, we’re registering a corporation that are not Thawas Island, the Marshall Islands, but they are registered under the corporate registry program that we established under our laws.

[00:24:36] David Paul: So if there is going to be anything to adjudicate any dispute among the members of the corporation that they’re residing in the Marshall Islands, Marshall Islands jurisdiction and Marshall Islands laws and Marshall Islands court system are going to be the one adjudicating these disputes because they are residing in our jurisdiction.

[00:24:54] David Paul: It is no different than what we’re trying to do with respect to, with the, with the DAO when we, [00:25:00] when we, uh, have the DAO legislation in here, meaning that they are, are domiciled in the martial arts under our laws. Do

[00:25:08] Balaji: you, uh, you know, would you be able to award licenses, for example, to, uh, to somebody like, uh, banking licenses, like, you know, if, if banks, uh, you know, if, if, uh, You know, you’re a sovereign country, you passed a law on this, if somebody wanted to become a bank, uh, could they potentially become a crypto friendly bank and set up in the Marshall Islands?

[00:25:29] Balaji: Is that a possibility?

[00:25:30] Adam Miller: So I, I could speak to this because we’ve had this conversation with the banking commissioner in the Marshall Islands and they’re open to it, but first, um, they’re looking to, to Midau to help them draft the regulations under which that type of activity would occur. So currently VASPs and banks.

[00:25:48] Adam Miller: Are not supported at least as Dow LLCs in the Marshall Islands, but I should clarify that there is a distinction between the Dow and a protocol, right? So if a protocol [00:26:00] does DeFi, that doesn’t make you a VASP in the Marshall Islands, the Marshall Islands of VASP would be someone who’s actually setting up a bank or an exchange or something like that.

[00:26:09] Adam Miller: And to my knowledge, the banking commissioner is open to it, but only once we help draft a new regulation. Well, so

[00:26:16] David Paul: let me, let me jump in on that. Let me just make it clear that, so no, nobody can choose about it. Mars, digital assets or digital currency or whatever you, or the assets are not, they’re not that, they’re, they’re not the, they’re not illegal in the Marshall Islands.

[00:26:35] David Paul: They’re not outlawed. They are allowed, but they’re, the problem is we still have to develop the regulations, the proper regulations for them to be regulated. But as far as them registered, of course they can come. We’re open for business. They have to go through the process of getting registered, but then they’ll be, have to be reviewed by the, uh, the authorities.

[00:26:58] David Paul: No one is stopping them, [00:27:00] but they’re going to have to be, but they will say, well, we need to develop the regulations before, the regulatory frameworks before we can allow you to start operating.

[00:27:09] Adam Miller: So right now we’re working on an amendment to the Dow Act as well as a Dow regulation that makes it doesn’t add any new rules, but makes it really clear to Dow’s exactly how to follow all the laws of the Marshall Islands and actually provides them with other benefits, even in the other in the jurisdictions where the founders or other members reside.

[00:27:32] Adam Miller: Just by categorizing things a certain way, you don’t have to fly to the Marshall Islands. That’s why we have an office there. It’s the registered agent. So my DAO is your registered agent. Um, you don’t have to fly there. You might want to because it’s beautiful. Um, but, uh, basically we have variable pricing for DAOs of different sizes.

[00:27:50] Adam Miller: So usually there is a conversation that someone from our team has with the DAO or representatives of the DAO. To figure out what’s the model that works best for them. [00:28:00] Oftentimes they have questions, you know, most people starting DAOs are new to DAOs because DAOs are new. And so we do offer not legal advice, but business advice for DAOs that ask questions about everything from what technology to use, to what are common structures or common challenges that other DAOs are facing.

[00:28:18] Adam Miller: And then again, we also get them connected with lawyers in our partner network when they need actual legal advice or tax advisors and things like that. So it’s not just a form. Usually there’s a bit of, it’s kind of a consultative process where we help you through everything. That’s right. So our clients interface with my DAO directly, and then we interface with the government on their behalf.

[00:28:40] Adam Miller: They don’t have to have a management team. So we, we refer to the initial members of the DAO as the group of people that is forming the DAO. And that can be as few as one person and it could be a founder, but it doesn’t have to be. Or it could be the entire DAO forming it together all at the same time.

[00:28:57] Adam Miller: There are KYC requirements for any [00:29:00] beneficial members, we call them, because these are, uh, especially with nonprofit DAOs, these are members, not owners. Um, and so for a nonprofit DAO LLC, any or for profit, anyone who has 25 percent or more governance rights and any managers have to do KYC, but often that’s one or zero people, right?

[00:29:19] Adam Miller: So it’s, it’s whoever does want to be that person. And who’s. Interfacing with us. And I think, uh, in one of our draft regulations, we call that person a representative agent. So there will be a form for someone to fill out to say, I’m the person you should, you know, talk to on behalf of the Dow. It doesn’t give you any additional legal liability.

[00:29:38] Adam Miller: It doesn’t give you any power over the Dow. It’s just a matter of process that we need someone to, to deal with. We need a phone number, an address, an email address, just in case we need to reach out.

[00:29:50] Balaji: Got it. Okay. And so LLCs are actually well suited for this because they have lots of members potentially.

[00:29:55] Balaji: And so you could have lots of symmetrical members and members of the DAO. So [00:30:00] it’s sort of a scaling up of LLCs, as you mentioned.

[00:30:02] Adam Miller: Yeah. And a lot of LLCs also have membership interests already, which is a way of dividing governance rights and or economic ownership, uh, in a, in a more, uh, nuanced way. So for example, a lot of our DAOs are one token, one vote DAOs.

[00:30:16] Adam Miller: And the way we construct that is that each token represents one membership interest, and then you do, you have proposals where there’s a quorum of, you know, 25 percent of the membership interest. And you need 51 percent of the people voting of the membership interests voting to carry a proposal. And so we’re really tying these new Web3 concepts to just like you said, LLC concepts that have been around for a long time.

[00:30:42] Balaji: And can you name some of the most interesting DAOs that you’ve seen? Like any that have publicly called themselves Marshall Island DAOs?

[00:30:50] Adam Miller: Yeah, sure. And the nice thing is that a lot of these Um, DAOs have everything public on the internet and on chain. And so, you know, anyone can go see this information, but, [00:31:00] uh, we have MoonDAO, which is the DAO that I think has already sent people into space.

[00:31:04] Adam Miller: Um, Crypto Mondays is a global meetup community in over 50 cities around the world that, uh, a lot of folks have probably heard of, uh, AdmiraltyDAO. So that’s the DAO for the Clipper Exchange, which is a top 100, you know, DeFi, uh, platform. Those are some good examples. So that was great

[00:31:21] Balaji: hearing from Adam on kind of, um, You know, uh, on how my DAO has facilitated it and gotten a hundred something DAOs set up.

[00:31:29] Balaji: I know, you know, both, uh, both you and the sender have been working on this. You, you mentioned you had some remarks that, uh, had been prepared.

[00:31:37] Minister: Just a few, few points I wanted to, um, convey. And some of them are just reiteration of what, um, Sather Paul had mentioned earlier. And it’s, uh, I just wanted to bring up how the government is in full support of the, the, the law that was passed.

[00:31:54] Minister: It went through the proper and thorough, uh, process as, as, as it [00:32:00] was to go through the Parliament. And when it reached, uh, the Parliament, um, it was, uh, unanimously decided that, uh, to, to be passed. And as I, if I remember

[00:32:12] David Paul: correctly, um,

[00:32:14] Minister: all that were in attendance, all the members of Parliament that were in attendance, were, would, did voted yes that the law should be passed.

[00:32:22] Minister: Except for one, if I remember correctly. I just wanted also to convey that, um, we see this as an opportunity and we’ve been exploring means and ways that we could, uh, establish a stable economy for the, for the RMI, given that we’re, other than the financial assistance that we’re receiving from, from the U.

[00:32:42] Minister: S. under the compact agreement we have with the U. S. We’re mostly covered by water, so our resources is basically mainly, uh, marine resources. And given our current situation with, uh, uh, sorry, uh, climate change, low lying islands, and we’re [00:33:00] currently the front liners, uh, to the changes of, uh, climate change.

[00:33:04] Minister: And we see that it would be given the high rising, uh, the rising level of, uh, water, sea, sea level and, uh, the rising, uh, temperatures would affect, uh, the marine life and surely in the future might affect our,

[00:33:19] David Paul: our resources and, and, uh, marine

[00:33:22] Minister: resources. So, by saying that, I’m just trying to Gunvei, our governments, are thinking of trying to explore means and ways of, um, trying to establish a stable economy given we’re a small island to one of the states.

[00:33:37] Minister: And Maitao is that we see it’s a perfect opportunity for us to explore and look into the future to obtain a steady stream of revenue for RMI. So we’re in full support of the Maitao. Uh, the government of the, government of the Marshall [00:34:00] Islands. And, uh, like you, uh, it was mentioned, uh, we have a ship registry, which is, uh, I, if I remember correctly, you are currently ranking in, uh, second or third in, uh, ship registry rankings.

[00:34:15] Minister: Uh, and we definitely see my dollar registry also would, would be a Would benefit the economy

[00:34:23] David Paul: of the iron mining.

[00:34:25] Balaji: Well, that’s actually a great precedent, because, you know, a ship can be registered anywhere. If the Marshall Islands is a top ship registry, this is like a cloud registry for all of these, you know, on chain entities, which could be, in theory, registered anywhere, and so you register them there.

[00:34:40] Balaji: That’s actually pretty interesting. Law of the sea. Things like that. That’s cool. Um, and, uh, sender, did you have anything, uh, that, uh, you were going to say,

[00:34:51] David Paul: you know, just to compliment what the minister alluded to earlier and what Adam actually emphasized on our quest to [00:35:00] be the premier jurisdiction globally, uh, for Taos.

[00:35:05] David Paul: And we see that the digitization of our, our, our financial sector, our economic sector, uh, and even technology. Is is really the future. So, you know, if you really look at where we are, we are such a small, uh, small island countries, a small island country in a fiscal setting. But with the digitization of all these, uh, sectors that I I mentioned, it is really an equalizer, so to speak, because then there’s really no excuses for us to be say they we were at the end of the global supply chain.

[00:35:45] David Paul: We are at the mercy of the global supply chain of goods and services, but with the, with the technology of the web three and all of that stuff, that actually is an equalizer that everybody’s on the same vehicle footing, so to speak. [00:36:00] Uh, so we actually, the advantage that we have, we’re very small or we’re very agile and we can actually, uh, have a short turnaround time to, to be able to amend our laws and our regulations so we can be We got gator for these, uh, uh, these organizations, uh, on the web three.

[00:36:24] David Paul: I say that, uh, that is going to be our advantage and, and, and, you know, our size could be used as an advantage for us in, in the traditional settings of economies and finance where our size is really our disadvantage because we, we lack the economy of scale. But with, with, uh, with technology, sizes are advantage.

[00:36:51] Balaji: Because you’re nimble and you can, uh, do things even if, uh, even if folks don’t. You can get to consensus much, much sooner than many other countries. [00:37:00] I’d love in particular if there was an island that was large enough that you might be able to set up a self driving car zone or something like that, just to kind of show it can be done, you know?

[00:37:08] Balaji: Are they, are they just, are they just a little, like, piece of rock in the middle of the ocean? Oh yeah,

[00:37:12] David Paul: they’re, they can be ten acres. Land, they could be, no, they’re actually land. They’re like private lands where you can like, like Richard Branson, who bought his own Island in the Caribbean. Actually, you can actually lease your own Island and develop it and have your own, uh, exclusive Island for yourself.

[00:37:34] Balaji: Wow. Okay. Wait, so you can get a 10 acre island in the, in the Marshall Islands. And then of course you have to go and build the Harbor and the dock, and you have to be able to get people back and forth and so on and so forth, or, or just some of them come with that. No,

[00:37:47] David Paul: no, it’s up to you. What we’re trying to do is when we digitize these islands, because we’re, because, you know, we’re trying to, uh, put it in the smart contract.

[00:37:57] David Paul: And by doing that, we’re [00:38:00] digitizing the lease of that island. And then you go have. You have access to an island by to yourself, let’s say for 50 years, 400 years, uh, whatever you, and then how do you, it’s like a one stop shop so you don’t have to come to the Marshall Islands and actually, uh, go through the legal process of acquiring a land.

[00:38:19] David Paul: We will do all of that and put them into an NFT and when you buy the NFT, you’re actually buying the lease and have rights exclusive right to that island to yourself for the next 50 to 100 years.

[00:38:32] Balaji: That’s really awesome. What is the biggest, uh, island, uh, like that, that you’re selling or NFTing? Leasing, I should say.

[00:38:39] David Paul: Well, it is different. I mean, the island that, the island that I was, I was going to use it as a, as a, you know, as you start with, uh, it’s like a prototype, uh, is, is like three acres, three to five acres, something like that.

[00:38:59] Balaji: And is it, [00:39:00] is it, I mean, the Marshall Islands, it’s a million square meters, I think you said, or a million square miles of ocean.

[00:39:05] Balaji: So is that near one of the main islands or how should we think about that? Is it all the way out there? Is it near one of the main ones? Like, uh, so, so, or how should we think about that? Are they all nearby or are they all kind of scattered around the ocean? Yeah,

[00:39:20] David Paul: it’s one of the, it’s in one of the, it’s on Kwajalein Atoll, that’s where the United States military base is at, it’s one of the, it’s one of the urban

[00:39:29] Adam Miller: centers.

[00:39:31] Adam Miller: But, by the way, the Marshall Islands is one of the most popular tourist destinations for the richest people in the world. They take their yacht and they park next to one of these mostly uninhabited islands and have some of the best snorkeling and scuba diving in the entire planet, basically with your own private island just for that week.

[00:39:49] Adam Miller: Right? So, especially for anyone who has a yacht, then you don’t even have to deal with some of the challenges of Flying in and having to build your own cabin on your own private island, [00:40:00] just stay on your yacht.

[00:40:01] Balaji: Well, maybe a Dow could lease a yacht or something like that. That’s really interesting.

[00:40:05] Adam Miller: Yeah.

[00:40:06] Adam Miller: There’s gotta be a yacht Dow already.

[00:40:09] Balaji: Yep. That’s probably true. I think that that basically covers it. So just to kind of. Uh, recap, um, you pass a new law in 2022. It enables basically a Fiat company, crypto company interface for LLCs and LLC like entities, AKA DAOs. It’s crypto native. It has a full support of the government.

[00:40:28] Balaji: It sort of extends what you’ve already done with your successful ship registry. This is not your first crypto law. You’ve actually been involved in this space for almost five years now, which is eternity in crypto years, and about a hundred entities have already been set up. And, uh, if people want to learn more, then go to, uh, I think, myDAO.

[00:40:45] Balaji: org. Uh, so, uh, Senator, Minister, do you have any, uh, closing words? Anything, uh, you want to say?

[00:40:51] David Paul: Oh, we just wanted to thank you for the time and I’m really glad to be part of your, uh, podcast and looking forward to, uh, the future

[00:40:59] Balaji: encounter. [00:41:00] Wonderful. Great. And we’ll come and visit the Marshall Islands and, uh, maybe by.

[00:41:05] Balaji: Maybe buy an island or something. All right, wonderful. Thank you, Senator. Thank you, Minister. Thank you, Adam. Thank you, Balaji. Okay. Well, thanks guys. This is great. Thanks for coming on.