PRFC-19: Legal entity registration for Plutus DAO

Overview

Plutus has reached a stage where operating without a formal legal entity creates increasing friction. Partnerships, audits, and service agreements currently rely on personal or third-party proxy entities. This also adds inefficiency in taxation as tax authorities handle unregistered entities in different ways - often defaulting to the DAO being projected as a local entity. This limits scalability, increases risk, and complicates long-term planning, and decreases capital efficiency due to varying taxation on services and team compensation.

This proposal selects Plutus DAO’s first legal wrapper and is explicitly not a final jurisdictional structure. Separate operating entities may be created later for region-specific products and compliance, e.g. US entity for legal compliance with many jurisdictions by proxy, an Asian entity for APnJ compliance, and EU entity for MiCA compliance.

In the process of determining the options for this proposal the team also has compared the EU through Estonia or Malta, Dubai, and Singapore. All of these were omitted before vote based on higher operational costs and stricter physical presence compared to the remaining options put up for vote.

Towards individual users and holders the effects are minimal. For the protocol a legal entity makes operation more efficient.

Objective

Establish a legal entity that:

• enables Plutus DAO to contract directly with counterparties
• improves longevity and operational continuity
• minimises overhead while preserving jurisdictional flexibility
• does not necessarily bind all protocol IP to any specific jurisdiction

The decision is between a Marshall Islands DAO entity and a Wyoming DAO LLC.

Context and constraints

Plutus is a for-profit protocol which restricts the choice and adds tax considerations for the registered entity. Overhead caused by registration, both in cost and time, should remain low. Multisig signers will act as authorized representatives where required and the DAO continues to be the ultimate deciding party.

Due to most global compliance being tied to operation in the US, APnJ, or EU, as they by proxy enable most global operation, we will for simplicity use them as main examples when talking about potential localised legal entities.

Option — Marshall Islands DAO entity

Registering in the Marshall Islands provides a DAO-specific legal framework that is well suited for acting as a neutral, top-level entity. This structure is commonly used as a parent or IP-holding entity, with operating subsidiaries formed later in specific jurisdictions.

The main advantage is flexibility. IP and DAO-level contracts can sit outside the US, APnJ, and EU, while potential future local entities can be formed for regulated or customer-facing activities. Annual costs for registration are higher than a US entity, but they are relatively stable and predictable and create less meta-costs. Tax exposure is limited if no local Marshall Islands activity is conducted.

Authorized representation would be handled by existing multisig signers, with an expected requirement of two to three natural persons.

Option — Wyoming DAO LLC

A Wyoming DAO LLC offers a clear, low-cost path to a for-profit legal entity within the United States. It is familiar to US-based service providers and often easier to onboard with auditors, vendors, and protocols that prefer US counterparties.

At a similar cost and high compliance and fitting with US based users. Less opaque than Marshall Islands from a partner perspective.

However, this option is risky before the Clarity act passes and creates a stronger US jurisdictional nexus. Even with limited activity, US tax reporting and compliance obligations apply on an ongoing basis. While annual costs are low in absolute terms, the entity is less suitable as a neutral IP-holding parent if Plutus later expands into both APnJ and EU markets.

The taxation, in the case of growth in revenue, is heavier both structurally and relatively if all operations are based in US due to federal tax.

There is also consideration of global positioning and predictability in operations for a US entity that would own all Plutus IP where significant swings in common outlook, global relations, and jurisdiction happen in short periods of time as demonstrated by the previous 24 months adding risk of operational impairment globally.

Authorized representation would be handled by multisig signers, with one to two natural persons typically sufficient. It is however possible that future legistlation, e.g. Clarity Act, would require tokenholder KYC for frontend applications.

Costs

Based on typical, non-premium providers and light operational activity:

• Marshall Islands DAO: approximately $6k–10k setup and $4k–7.5k per year thereafter.
• Wyoming DAO LLC: approximately $1k–3k setup and $6-11k per year thereafter.

Cost comparison (all-in, higher transaction volume)

Assumptions: for-profit DAO, contractor-heavy operations, hundreds of on-chain transactions per year, no employees, non-premium but competent providers.
Tax at scale assumes ~$5–10m annual profit.

Cost category	Marshall Islands DAO entity	Wyoming DAO LLC
Formation (one-time)	~$6,000–10,000 (professional DAO service incl. registration and setup)	~$1,000–3,000 (state filing, agent, basic legal help)
Registered agent / DAO agent	~$1,000–2,500 per year	~$50–300 per year
Mandatory filings & government fees	~$900–1,200 per year	~$60–200 per year
Bookkeeping (high transaction volume)	~$3,000–6,000 per year (on-chain reconciliation, distributions, LP activity)	~$3,000–6,000 per year
Tax compliance & reporting & payroll	~$1,000–2,000 per year	~$4,000–9,000 per year
Tax at scale (percentage component)	Territorial taxation; typically 0–3% on locally attributable gross revenue, often negligible if no RMI-source income	~21% US federal corporate income tax if taxed as a C-Corp (0% Wyoming state tax)
Estimated annual total (ongoing)	~$6,000–11,000 (excluding any local revenue tax)	~$7,000–14,000 (excluding federal income tax)

Compared to projected annual savings in current tax overhead: ~$70-90k

Execution

If approved, the core team will:

• engage legal counsel and a registered agent
• appoint authorized representatives from existing multisig signers
• complete formation of the selected entity
• publish a transparency note covering entity details, signing authority, and high-level IP and contracting structure

Budget

Treasury spending is capped at $12,000 to cover formation and first-year costs.

Timeline

Legal formation will begin immediately after the vote. Expected completion is within two to eight weeks, depending on jurisdiction and service provider timelines. A transparency note will be published within seven days of completion.

Conclusion

This proposal establishes a formal legal wrapper for Plutus DAO to reduce operational risk, improve execution velocity, and support long-term growth, while keeping future US, APnJ, and EU expansion optional and scoped.

Voting Options

• FOR (Marshall Islands)
• FOR (Wyoming)
• AGAINST (Do not pursue legal registration)
• ABSTAIN

Sources and references (contextual)

The following sources were used to inform the considerations in this proposal. They are provided for context and transparency and do not constitute legal or tax advice.

DAO legal frameworks

• Marshall Islands DAO Act (2022) and amendments:
  https://rmicorregis.com/dao
  https://www.doi.gov.mh/dao
• Wyoming DAO LLC statute and guidance:
  https://sos.wyo.gov/Business/DAOs.aspx
  https://sos.wyo.gov/Forms/Business/LLC/DAOLLC-ArticlesOrganization.pdf

Tax and compliance context

• IRS guidance on LLC tax classification (pass-through vs C-Corp election):
  https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc
• Wyoming state tax overview (no corporate income tax):
  https://revenue.wyo.gov/divisions/taxpayer-services/wyoming-taxes
• Marshall Islands territorial tax system overview:
  https://www.rmiembassyus.org/taxation

Regulatory and market-structure considerations

• Digital Asset Market Clarity Act (US Congress):
  https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409127
• U.S. Securities and Exchange Commission (digital assets):
  https://www.sec.gov/spotlight/crypto-assets
• U.S. Commodity Futures Trading Commission (digital assets):
  https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/crypto
• FinCEN guidance on virtual assets and AML obligations:
  https://www.fincen.gov/resources/statutes-regulations/guidance/application-fincens-regulations-certain-business-models

General and cost benchmarking

• Marshall Islands DAO service pricing examples:
  https://www.midao.org/pricing
  https://www.healyconsultants.com/marshall-islands-company-registration/fees-timelines/
• Wyoming registered agent and LLC cost benchmarks:
  https://www.howtostartanllc.org/wyoming-llc/costs/
  https://www.llcuniversity.com/wyoming-llc/dao/