Stakers of Neta, a store of value coin built on Juno, have passed a governance vote to work with a company to incorporate as a nonprofit in the Republic of the Marshall Islands.
The vote passed overwhelmingly on DAO DAO — decentralized autonomous organization infrastructure built on Juno — with 98.77 percent voting to spend $9,500 from the Neta Dao treasury to MIDAO Inc., a company specializing in assisting entities through the incorporation process in the Marshall Islands.
“The MIDAO LLC’s clarity on essential issues provides peace of mind for members, lowers organizational operating expenses, and allows the DAO to focus on its mission of accelerating crypto-native communities and institutions,” said Neta DAO Member Lil D.
After lengthy discussions between Neta DAO members on Discord and other platforms, a decision was made to bring a proposal forth for Neta DAO stakers to vote on, which lays out the advantages of becoming a nonprofit LLC in the Marshall Islands, a country known for its regulatory and tax clarity that is widely used by international shipping companies and other businesses seeking to incorporate outside the European Union and United States. The Marshall Islands has a zero percent nonprofit tax rate.
“If the US or literally any other jurisdiction had clear and non-onerous laws for DAOs in our position, there would have been a more significant decision-making process for us.”
-Neta DAO Member Lil D
This is the first step of incorporation for Neta Dao, and the next will be creating an operating agreement and having a second governance vote to ratify the agreement. If successful, the agreement will be sent to MIDAO to finalize the incorporation and receive Neta DAO’s MIDAO LLC charter.
Under the incorporation, Neta DAO will not be able to distribute rewards or profits to its stakers as it will be a nonprofit, which is how the DAO has operated since its inception. Some Neta DAO members believe this restriction can be viewed as a way to promote building and incentivize creative value capture.
According to Neta DAO members, research was done on Swiss, Cayman, Panama Foundations, Wyoming and Vermont DAO LLCs, Guernsey special trusts and more, but these were ruled out due to high costs for initialization and maintenance, ongoing or unclear compliance requirements, and organizational rigidity and centralization not befitting a DAO, including the need for designated owners who assume liability.
With the MIDAO incorporation, members would only need to provide know your customer information (KYC) if they own greater than 10 percent of Neta DAO’s voting power.
“An organization that works with funds has a legal structure just by existing whether anyone likes it or not,” Neta DAO Member Envy said. “Frontrunning the inevitable wave of regulation will keep Neta DAO stakers and contributors in good standing and guarantee the DAO’s survivability.”
From the Neta Dao governance proposal:
“The Marshall Islands has crafted a structure that is designed for DAOs and that gives Neta DAO a solid foundation for long-term development in a space that will be increasingly filled with regulators and lawmakers.”
