UAE set to introduce legal framework for DAOs to boost blockchain growth

The Ras Al Khaimah Digital Assets Oasis (RAK DAO) is preparing to introduce a legal framework for Decentralized Autonomous Organizations (DAOs) in the United Arab Emirates, marking a significant development in the country’s blockchain and Web3 landscape.

According to a recent announcement, this new legal regime aims to establish a comprehensive structure addressing tax obligations, property ownership (both on-chain and off-chain assets), and legal protections for DAO founders, members, and contributors.

The framework will also enable DAOs to enter into legally binding contracts and provide clear guidelines for dispute resolution.

The introduction of the framework will be officially unveiled at the DAO Legal Clinic event on Oct. 25.

Irina Heaver, a partner at NeosLegal, noted that the framework is designed to ensure that DAOs operate in compliance with UAE regulations.

She further explained that the regime will allow DAOs to be set up remotely in the UAE without requiring physical presence.

This simplifies the process for global players to tap into the UAE’s fast-growing blockchain and Web3 sectors from anywhere in the world.

This remote registration process is expected to streamline entry for businesses into the UAE’s digital economy, enhancing the country’s appeal as a hub for Web3 projects.

Additionally, Heaver emphasized that establishing a DAO in the UAE would be significantly more cost-effective compared to other jurisdictions.

For instance, while setting up a DAO in Switzerland could cost up to $46,000, the starting cost in the UAE is around $3,000, making it accessible even to smaller DAOs.

In the long term, Heaver believes this initiative will position the UAE as a global hub for blockchain and crypto development, attracting more entrepreneurs and developers to the region.

Fostering blockchain innovation across the UAE

This legal framework comes at a time when RAK DAO is actively fostering blockchain innovation.

Earlier this year, it partnered with stablecoin issuer Tether to promote the adoption of Bitcoin and stablecoin technology in Ras Al Khaimah.

Through its educational arm, Tether Edu, the initiative has launched various programs to educate participants about blockchain technology, peer-to-peer systems, and cryptocurrency use cases.

The forthcoming DAO framework is one of several measures the UAE has introduced to create a more accommodating environment for blockchain and crypto projects.

In a key development, the Federal Tax Authority recently introduced VAT exemptions for virtual asset transactions, which apply to ownership transfers and conversions.

Further supporting the sector, last month, Hong Kong-based insurer OneDegree received approval to offer the region’s first custodial risk insurance product for crypto-focused companies.

In another move, regulators allowed banking giant Standard Chartered to provide digital asset custody services in the UAE, in partnership with Brevan Howard Digital.

Regulatory efforts have also eased the registration process for crypto exchanges operating in the UAE.

In September, the Securities and Commodities Authority (SCA) and Dubai’s Virtual Assets Regulatory Authority (VARA) reached an agreement allowing firms licensed by VARA in Dubai to operate across the UAE, eliminating the need for multiple licenses.

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