UAE pioneers legal framework for DAOs in free economic zone
Organizations will be able to register in the country without being there physically
The free economic zone RAK Digital Assets Oasis (RAK DAO) is pushing forward with an accelerating move: to have a legal structure for decentralized autonomous organizations.
The UAE has positioned itself as a global hub for innovation, so its progressive efforts may hardly come as a surprise.
Propelled by both RAK DAO and law firm NeosLegal, the matter will be discussed during the DAO Legal Clinic to be held next week, on October 25.
According to Irina Heaver, a NeosLegal partner, the framework could offer legal compliance clarity to the DAO landscape. The lawyer further explained that on a wider scale, this will significantly impact the web3 landscape and decentralized governance in the country.
UAE TO LAUNCH DAO LEGAL FRAMEWORK
— IBC Group Official (@ibcgroupio) October 18, 2024
So, the United Arab Emirates is stepping up with a legal framework for DAOs through the Ras Al Khaimah Digital Assets Oasis, and it’s a game-changer.
This setup not only clarifies how these digital collectives can operate legally but also lets… pic.twitter.com/PwhXoyPk4J
This anticipated structure will help shed light on a persisting gray area: tax obligations. What's more, it will provide insight regarding DAO benefits and allow the ownership of assets off-chain and on-chain.
Since DAOs are decentralized by nature, they tend to sit in a gray area when it comes to tax regulations, as these may significantly vary across jurisdictions.
By outlining tax regulations clearly, this incoming legal framework may address these uncertainties. This will enable DAOs to follow clear compliance standards while taking full advantage of the free economic zone's benefits.
Non-UAE-based entities could also benefit from the framework, as it will give a go signal for DAOs to register in the country even without being there physically.
These organizations may even open their own bank account. Heaver noted that the “remote accessibility makes it easier for global participants to engage with the UAE's burgeoning virtual assets sector”.
With this progressive move, more decentralized organizations—especially those that need a tax-friendly environment—could be attracted to the RAK DAO free economic zone.
Heaver further noted that this would also place the UAE one step forward as a "global hub for blockchain and digital asset innovation, attracting entrepreneurs and investors”.
