Marshall Islands

{
  "analysis_text": "The regulatory status of cryptocurrency in the Republic of the Marshall Islands (RMI) is best characterized as a \u0027Gray-Zone\u0027. While the act of buying, selling, and holding cryptocurrency is not criminalized for individual retail users, the domestic infrastructure to support these activities is legally paralyzed. The government passed the Banking (Amendment) Act in 2020, which formally brought Virtual Asset Service Providers (VASPs) under the supervision of the Banking Commission. However, reports from late 2025 indicate that no VASP licenses have been issued, effectively making the operation of a local exchange illegal despite the existence of a licensing framework. This forces all retail trading activity onto offshore platforms.\n\nThe country\u0027s approach to crypto has been dominated by its ambitious but failed attempt to launch a national sovereign cryptocurrency, the \u0027SOV\u0027. Enacted in 2018, the Sovereign Currency Act sought to make the SOV legal tender alongside the US Dollar. This move drew sharp rebukes from the International Monetary Fund (IMF) and the US Treasury, who warned that it jeopardized the RMI\u0027s last remaining correspondent banking relationship (CBR). After years of delay and diplomatic friction, the RMI government capitulated in August 2025, passing the Monetary Authority Act which explicitly repealed the Sovereign Currency Act, effectively ending the state-backed crypto project.\n\nDespite the failure of the SOV, the Marshall Islands has successfully carved out a niche as a corporate haven for Decentralized Autonomous Organizations (DAOs). The Decentralized Autonomous Organizations Act of 2022 (amended in 2023) allows DAOs to register as Limited Liability Companies (DAO LLCs). This legislation is unique globally as it recognizes the decentralized nature of these entities while providing them with legal personhood. This has led to a surge in DAO registrations, even as the domestic retail trading environment remains stagnant.\n\nFor the average retail investor, the environment is one of \u0027tolerance without support\u0027. There are no government-endorsed avenues to purchase crypto, and local banks are highly hesitant to process crypto-related transactions due to the fragility of their US dollar clearing channels. The regulatory focus has shifted entirely to AML/CFT compliance to satisfy international watchdogs like the FATF, rather than fostering a local retail crypto market. Consequently, while trading is legal, it is operationally difficult and relies entirely on the accessibility of foreign service providers.",
  "confidence_level": "High",
  "executive_summary": "Retail cryptocurrency trading is legally permitted in the Marshall Islands, but the regulatory environment remains restrictive and underdeveloped for service providers. While the government has enacted legislation to license Virtual Asset Service Providers (VASPs) under the Banking Act, no licenses have been publicly issued to date, effectively preventing local exchanges from operating. The country recently repealed its controversial \u0027Sovereign Currency Act\u0027 in August 2025 following sustained pressure from the IMF and US Treasury. Consequently, residents must rely on offshore platforms for trading, though the jurisdiction has successfully positioned itself as a global hub for registering Decentralized Autonomous Organizations (DAOs).",
  "grounding_urls": [],
  "status": "Gray-Zone",
  "structured_data": {
    "confidence_level": "High",
    "detailed_analysis": "The regulatory status of cryptocurrency in the Republic of the Marshall Islands (RMI) is best characterized as a \u0027Gray-Zone\u0027. While the act of buying, selling, and holding cryptocurrency is not criminalized for individual retail users, the domestic infrastructure to support these activities is legally paralyzed. The government passed the Banking (Amendment) Act in 2020, which formally brought Virtual Asset Service Providers (VASPs) under the supervision of the Banking Commission. However, reports from late 2025 indicate that no VASP licenses have been issued, effectively making the operation of a local exchange illegal despite the existence of a licensing framework. This forces all retail trading activity onto offshore platforms.\n\nThe country\u0027s approach to crypto has been dominated by its ambitious but failed attempt to launch a national sovereign cryptocurrency, the \u0027SOV\u0027. Enacted in 2018, the Sovereign Currency Act sought to make the SOV legal tender alongside the US Dollar. This move drew sharp rebukes from the International Monetary Fund (IMF) and the US Treasury, who warned that it jeopardized the RMI\u0027s last remaining correspondent banking relationship (CBR). After years of delay and diplomatic friction, the RMI government capitulated in August 2025, passing the Monetary Authority Act which explicitly repealed the Sovereign Currency Act, effectively ending the state-backed crypto project.\n\nDespite the failure of the SOV, the Marshall Islands has successfully carved out a niche as a corporate haven for Decentralized Autonomous Organizations (DAOs). The Decentralized Autonomous Organizations Act of 2022 (amended in 2023) allows DAOs to register as Limited Liability Companies (DAO LLCs). This legislation is unique globally as it recognizes the decentralized nature of these entities while providing them with legal personhood. This has led to a surge in DAO registrations, even as the domestic retail trading environment remains stagnant.\n\nFor the average retail investor, the environment is one of \u0027tolerance without support\u0027. There are no government-endorsed avenues to purchase crypto, and local banks are highly hesitant to process crypto-related transactions due to the fragility of their US dollar clearing channels. The regulatory focus has shifted entirely to AML/CFT compliance to satisfy international watchdogs like the FATF, rather than fostering a local retail crypto market. Consequently, while trading is legal, it is operationally difficult and relies entirely on the accessibility of foreign service providers.",
    "executive_summary": "Retail cryptocurrency trading is legally permitted in the Marshall Islands, but the regulatory environment remains restrictive and underdeveloped for service providers. While the government has enacted legislation to license Virtual Asset Service Providers (VASPs) under the Banking Act, no licenses have been publicly issued to date, effectively preventing local exchanges from operating. The country recently repealed its controversial \u0027Sovereign Currency Act\u0027 in August 2025 following sustained pressure from the IMF and US Treasury. Consequently, residents must rely on offshore platforms for trading, though the jurisdiction has successfully positioned itself as a global hub for registering Decentralized Autonomous Organizations (DAOs).",
    "important_considerations": [
      "No local VASPs are currently licensed; residents must use foreign exchanges.",
      "The banking sector is extremely fragile; only one domestic bank has a US correspondent relationship, which is under constant threat due to crypto risks.",
      "DAOs can register as legal entities (LLCs), making the country a popular offshore corporate hub despite the lack of local retail trading infrastructure.",
      "Strict AML/KYC rules apply to any entity touching the financial system, monitored by the Financial Intelligence Unit."
    ],
    "key_regulatory_pillars": [
      "Banking Commission (now transitioning to Marshall Islands Monetary Authority - MIMA)",
      "Banking (Amendment) Act 2020 (Defines and regulates VASPs)",
      "Decentralized Autonomous Organizations Act 2022 (DAO registration)",
      "Financial Intelligence Unit (AML/KYC enforcement)"
    ],
    "landmark_legislation": [
      {
        "date_enacted": "2020-01-01",
        "identifier": "P.L. 2020-24",
        "name": "Banking (Amendment) Act 2020",
        "summary": "Amended the Banking Act to explicitly include \u0027virtual asset service provider\u0027 business as a regulated activity requiring a license from the Banking Commissioner. It imposes AML/CFT obligations on VASPs.",
        "url": "https://rmicourts.org/wp-content/uploads/2022/07/Banking-Amendment-Act-2020.pdf"
      },
      {
        "date_enacted": "2022-12-22",
        "identifier": "P.L. 2022-",
        "name": "Decentralized Autonomous Organizations Act of 2022",
        "summary": "A pioneering law allowing DAOs to incorporate as limited liability companies (DAO LLCs), giving them legal personality while recognizing their decentralized governance structures.",
        "url": "https://rmiparliament.org/cms/images/LEGISLATION/PRINCIPAL/2022/2022-0109/DecentralizedAutonomousOrganizationDAOAct2022_1.pdf"
      },
      {
        "date_enacted": "2018-02-26",
        "identifier": "P.L. 2018-53",
        "name": "Sovereign Currency Act 2018 (Repealed)",
        "summary": "Originally established the \u0027SOV\u0027 cryptocurrency as legal tender. This Act was repealed in August 2025 via the Monetary Authority Act 2025 due to international regulatory pressure.",
        "url": "https://rmiparliament.org/cms/images/LEGISLATION/PRINCIPAL/2018/2018-0053/DeclarationandIssuanceoftheSovereignCurrencyAct2018_1.pdf"
      },
      {
        "date_enacted": "2025-08-01",
        "identifier": "Bill No. 35",
        "name": "Monetary Authority Act 2025",
        "summary": "Establishes the Marshall Islands Monetary Authority (MIMA) and includes provisions repealing the Sovereign Currency Act of 2018.",
        "url": null
      }
    ],
    "notes_and_comments": "The repeal of the SOV Act in August 2025 marks a major pivot in RMI\u0027s crypto strategy, moving away from state-issued currency towards becoming a corporate registry hub for Web3 entities (DAOs). The \u0027Gray-Zone\u0027 status primarily reflects the gap between the existence of VASP laws and the lack of actual licensing.",
    "primary_sources": [
      {
        "date": "2020-01-01",
        "key_quote": "No virtual asset service provider business shall be transacted by a corporation or entity incorporated or otherwise formed in the Republic except by a licensed financial services provider.",
        "source_type": "law_text",
        "title": "Banking (Amendment) Act 2020",
        "url": "https://rmicourts.org/wp-content/uploads/2022/07/Banking-Amendment-Act-2020.pdf"
      },
      {
        "date": "2025-09-10",
        "key_quote": "In line with IMF advice, the MA Act was passed in August 2025, with a provision repealing the SOV Act, which had aimed to establish a digital sovereign currency as second legal tender.",
        "source_type": "official_government",
        "title": "Republic of the Marshall Islands: Staff Concluding Statement of the 2025 Article IV Mission",
        "url": "https://www.imf.org/en/News/Articles/2025/09/10/mcs091025-republic-of-the-marshall-islands-staff-concluding-statement-of-the-2025-article-iv-mission"
      },
      {
        "date": "2022-12-22",
        "key_quote": "An Act to provide for the formation, organization, and operation of decentralized autonomous organizations as limited liability companies.",
        "source_type": "law_text",
        "title": "Decentralized Autonomous Organization Act 2022",
        "url": "https://rmiparliament.org/cms/images/LEGISLATION/PRINCIPAL/2022/2022-0109/DecentralizedAutonomousOrganizationDAOAct2022_1.pdf"
      }
    ],
    "remaining_uncertainties": [
      "Will the new Marshall Islands Monetary Authority (MIMA) begin issuing VASP licenses now that the SOV project is repealed?",
      "Are there specific banking circulars that explicitly prohibit transfers to foreign crypto exchanges, or is it just de-risking behavior by banks?"
    ],
    "secondary_sources": [
      {
        "date": "2025-09-22",
        "key_quote": "Marshall Islands currently does not offer VASP licenses, effectively making it illegal to operate a VASP in the Marshall Islands.",
        "source_type": "analysis",
        "title": "Setting Up a DAO as a Marshall Islands LLC",
        "url": "https://www.pontinova.law/post/setting-up-a-dao-as-a-marshall-islands-llc"
      },
      {
        "date": "2025-12-04",
        "key_quote": "The authorities should not proceed with the planned global launch of a \u0027digital sovereign bond\u0027 given the lack of pre-requisite capacity.",
        "source_type": "analysis",
        "title": "IMF Executive Board Concludes 2025 Article IV Consultation with Republic of the Marshall Islands",
        "url": "https://www.imf.org/en/News/Articles/2025/12/04/pr251204-rmi-imf-executive-board-concludes-2025-article-iv-consultation"
      }
    ],
    "status": "Gray-Zone"
  }
}