Marshall Islands

DeFi Intel Research Desk2026-07-14Oceania

Is crypto legal in Marshall Islands? (2026)

Partially — holding is legal but activity is limited in Marshall Islands. Current status: Legal to hold; VASP licences not issued. Oversight sits with Banking Commissioner · Registrar of Corporations / MIDAO. Full details — governing law, licensing, tax and dated enforcement history — follow below (last reviewed 2026-07-14).

Framework: The Republic of the Marshall Islands (RMI) has no single crypto-asset code. Owning and trading crypto is not prohibited, but three separate strands define the picture: the Decentralized Autonomous Organization (DAO) Act 2022, the virtual-asset provisions of the Banking Act 1987, and the now-repealed Sovereign Currency (SOV) Act 2018.

In 2022 the RMI became the first country in the world to give decentralised autonomous organisations full legal personality. The Decentralized Autonomous Organization Act 2022 (52 MIRC Ch.7) lets both for-profit and non-profit DAOs incorporate as DAO LLCs, treats on-chain governance, voting and smart-contract execution as valid corporate action, and shields members behind limited liability. Finance Minister Bransen Wase said the adoption "commits its courts and its resources to the burgeoning world of decentralization." Registration runs through MIDAO, an exclusive public-private partnership with the RMI government, and a subsequent set of DAO Regulations (2024) added a supervisory backstop — its Section 15 empowers the licensing authority to impose fines and cancel a certificate of formation for non-compliance. A DAO LLC can generally operate without a virtual-asset licence, provided it does not itself run an exchange or custody service for others.

The Banking Act 1987 (17 MIRC Ch.1), as amended, defines a "virtual asset service provider" (§102) — covering fiat/crypto and crypto/crypto exchange, transfer, custody and issuance-related services performed for third parties — and makes the Banking Commissioner the licensing authority. Critically, VASP licences are not currently being issued, so operating a VASP from within the RMI is effectively unavailable; conducting financial-services-provider business (including VASP activity) without a licence is an offence carrying a fine of up to US$10,000.

The RMI's most-watched experiment, the Sovereign (SOV) — a decentralised national cryptocurrency legislated as a second legal tender alongside the US dollar under the Sovereign Currency Act 2018 — never launched. The IMF warned repeatedly that a free-floating parallel currency in a fully dollarised economy would raise macroeconomic and financial-integrity risks and threaten the country's last US-dollar correspondent-banking relationship. In August 2025, in line with IMF advice, the RMI repealed the SOV Act; authorities are instead exploring "USDM1," a digital sovereign bond whose issuance would be outsourced to private US and domestic entities. Submit corrections and primary-source links to [email protected].

Tax treatment

The RMI is a zero/low-tax jurisdiction, which is much of its appeal as a corporate wrapper. Non-resident domestic entities incorporated in the RMI that do no business locally are exempt from RMI taxes — no corporate income tax, no capital-gains tax, and no withholding on dividends, interest or royalties. For DAO LLCs specifically, non-profit DAO LLCs face 0% corporate, capital-gains and withholding tax, while for-profit DAO LLCs report their revenues and pay a 3% levy on gross revenues (excluding capital gains and dividends). Economic-substance requirements apply to entities that do conduct business in the RMI. Personal capital-gains treatment for residents is pending verification.

• Non-resident domestic entity: exempt from all RMI taxes (income, capital gains, withholding)
• Non-profit DAO LLC: 0% corporate / capital-gains / withholding tax
• For-profit DAO LLC: 3% levy on gross revenues (excluding capital gains and dividends)
• Personal capital-gains rate (residents): Pending verification

Travel rule applicability

Status: on the statute book, not operational. The Marshall Islands is a member of the Asia/Pacific Group on Money Laundering (APG); its Anti-Money Laundering Regulations 2002 sit under the Banking Act, and the amended Banking Act imports the FATF definition of a VASP. Because no VASP licences are issued, however, there is no supervised population of exchanges to which a FATF travel-rule transfer-data obligation is being actively applied. The 3rd-round APG mutual evaluation of the RMI (adopted September 2024, on-site November/December 2023) singled out the DAO sector as an ML/TF vulnerability precisely because of the "lack of regulations providing for the supervision and monitoring" of these entities. Specific travel-rule transfer-data thresholds are pending verification.

Notable enforcement and developments

• 2025. The Sovereign Currency Act 2018 was repealed, ending the RMI's legislated national-cryptocurrency (SOV) project after sustained IMF pressure; authorities pivoted toward a privately-issued "USDM1" digital sovereign bond.
• 2024. The APG mutual evaluation found the RMI's financial-intelligence and enforcement capacity underdeveloped — noting that "potential ML cases are not actively pursued" — and flagged the unsupervised DAO sector as a money-laundering / terrorist-financing risk.
• DAO Regulations 2024, §15. The licensing authority may impose fines and cancel a DAO LLC's certificate of formation for non-compliance. No public register of individual crypto enforcement actions was identified this research cycle (pending verification).

Public licensed CASP list

There is no public register of licensed virtual-asset service providers, because the Banking Commissioner is not currently issuing VASP licences — so no exchange or custodian holds an RMI VASP authorisation. The relevant public registry is instead the DAO LLC registry maintained by MIDAO under its partnership with the RMI government (registry.midao.org), which lists registered DAO LLCs rather than licensed exchanges. A precise count of active registrations is pending verification. Submit any known RMI virtual-asset licensees to [email protected].

Comparison to neighbours

Compare Marshall Islands crypto regulation with three geographically adjacent jurisdictions:

Doing business in Marshall Islands — practical notes

In practice the RMI is used less as a place to serve local retail customers — there are roughly 42,000 residents and the domestic crypto market is negligible — and more as a legal wrapper for DAOs and offshore entities. The draw is genuine legal personality for a DAO plus a zero/low-tax regime; the hard constraint is that no VASP licence is obtainable, so exchange or custody businesses cannot be licensed here and must instead be structured as ordinary activity outside the VASP perimeter or elsewhere. Correspondent-banking access for the jurisdiction is also fragile — a recurring IMF concern that drove the SOV repeal. DAO LLCs are typically formed through MIDAO; confirm the current DAO Regulations and any Banking Act amendments with primary sources before relying on this profile.

Methodology and sources

This profile was researched and updated by DeFi Intel's research desk on 2026-07-14 from the primary and secondary sources listed below — RMI legislation, the FATF/APG mutual-evaluation report, IMF Article IV materials, and the Banking Commissioner / MIDAO framework documents. Claims that could not be verified against a source are omitted or marked pending — we do not republish unverified third-party datasets. Submit corrections and primary-source links to [email protected].

Sources

• RMI Parliament (Nitijela) — Decentralized Autonomous Organization Act 2022 (52 MIRC Ch.7)
• MIDAO Docs — Virtual Asset Service Providers (Banking Act §102; VASP licences not available)
• FATF / APG — Marshall Islands Mutual Evaluation Report (adopted 2024)
• IMF — RMI 2025 Article IV Concluding Statement (SOV Act repeal; USDM1)
• Sovereign Currency Act of 2018 — background, IMF concerns and 2025 repeal
• Global Law Experts — Marshall Islands DAO (DAO Regulations 2024 §15; DAO LLC taxation)
• GSL — Marshall Islands tax system (non-resident domestic entity exemptions)
• Cointelegraph — Marshall Islands recognises DAOs as domestic LLCs