My Dow co-founder, Adam Miller, explains in an interview with Ashton Addison of Block West Capital that his company assists organizations to incorporate as decentralized autonomous organizations (DAOs). He highlights the importance of incorporation in reducing the legal, regulatory, and tax liabilities of DAO participants. My Dow helps DAOs determine the best jurisdiction and entity type to use for incorporation, with the Marshall Islands Dow LLC being their specialty. Miller also notes that while the first DAOs were focused on finance and cryptocurrency, they are branching out to other industries and addressing objectives outside the digital space.
Diving into DAOs in Web3
By Ashton Addison, Block West Capital
On this episode of the Crypto Coin Show, I am joined by Adam Miller, co-founder of My DAO, to discuss all things decentralized organizations. As DAOs gain popularity, it’s important to understand their place in the world of internet and traditional organizations. Adam shed light on why DAOs need to incorporate and how My DAO can help with that process. We also discussed the types of companies that are already incorporating DAOs and how the industry is branching out beyond finance and Web3.
What is My DAO?
First, let’s discuss what My DAO does. My DAO helps DAOs incorporate by creating the legal entity they need to function. Traditional companies are required to incorporate or file as an LLC, and the same principle applies to DAOs. The incorporation process allows for legal liability and tax liabilities to be separated, which is crucial for protecting individual members from legal action.
Why Should DAOs Incorporate?
DAOs will be viewed as a general partnership, which means that all members are jointly and severally liable for any legal action that is taken against the DAO (e.g., if there’s fraud). Additionally, if the DAO is profitable, it will be subject to tax liabilities, even if the money is not distributed to individual members or stakeholders. Incorporating the DAO will ensure that legal and tax liabilities are separated and that individual members are not held liable for the entire organization’s debt.
How Does My DAO Incorporate DAOs?
My DAO works with the government of the Marshall Islands to create the best legal and regulatory framework for DAOs. The Marshall Islands have passed a few laws in the past couple of years that created a DAO LLC that is modeled off of the work done in Wyoming. My DAO’s specialty is working with DAOs to evaluate the Marshall Islands DAO LLC and determine if it’s a good fit for their organization. If so, My DAO can create and maintain that entity for them.
Types of Companies Incorporating DAOs
While many DAOs are focused on building Web3 open source software related to finance (e.g., NFTs and DeFi), there are also a growing number of DAOs focusing on other industries. My DAO has worked with companies trying to save the rainforest, running meetup groups, and investing in ancient artifacts, to name just a few. As the industry continues to evolve, DAOs will likely become a standard option for all types of companies and organizations.
As the future of organizations, DAOs have a lot of room to grow and develop. Understanding the importance of incorporation is key to protecting individual members and stakeholders. My DAO has positioned itself to help companies navigate that process and evaluate the best legal and regulatory framework for their organization. As we continue to see DAOs expand into new industries and sectors, it will be exciting to see how they shape the future of organizations.