UAE Authorities Draft Legal Framework for DAOs

UAE authorities prepared a legal framework for decentralized autonomous organizations (DAO) to operate in the Ras Al Khaimah free economic zone (RAK DAO). The initiative is designed to allow international crypto companies to operate within the legal framework of the UAE without having a physical presence in the country.

The RAK DAO will introduce new regulatory rules to govern the process of establishing and operating a DAO. The legal framework will complement the existing rules and regulations of the country’s free economic zone.

The new legal framework aims to clarify how crypto projects can remain within the UAE legal ground while operating in a decentralized manner and will address the legal and governance requirements for DAOs. In particular, the draft law will:

• clarify tax obligations and exemptions;
• allow DAOs to formalize ownership of digital assets and fiat funds;
• provide legal protection from personal liability for DAO founders, members, and investors;
• enable DAOs to enter into legally binding contracts and establish dispute resolution guidelines. 

Under the new regime, DAOs will be able to register in the UAE remotely and operate without a physical presence in the country. This approach will attract international blockchain companies to the region, strengthening the UAE’s position as a global hub for blockchain innovation.

The new regime will be presented for discussion at the RAK DAO conference, which will take place on October 25. 

The UAE Ministry of Finance recently made a number of changes to tax legislation, exempting crypto companies from paying VAT. The country’s financial regulators agreed to create a unified licensing system for crypto-asset service providers in the region.