ARTICLE
16 December 2024

RAK Digital Assets Oasis: The First Web3 Free Zone In UAE

Belisario Consulting & Legal

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Law boutique with a deep understanding of both European and UAE legal frameworks, we bridge the gap between European companies and the vibrant UAE market. Our expertise encompasses a wide range of sectors, including corporate law, commercial contracts, fintech, and new technologies.
In 2023, the Emirate of Ras Al Khaimah, in the United Arab Emirates ("UAE"), made a significant leap in the digital and virtual assets landscape by launching the RAK Digital Assets Oasis ("RAK DAO")...
United Arab Emirates Technology

"RAK Digital Assets Oasis: a potential alternative for web3 projects looking to start or relocate to the UAE"

In 2023, the Emirate of Ras Al Khaimah, in the United Arab Emirates ("UAE"), made a significant leap in the digital and virtual assets landscape by launching the RAK Digital Assets Oasis ("RAK DAO"): https://www.rakdao.com/

Created as an independent authority, RAK DAO is a specialized economic free zone in UAE designed to cater to businesses in the field of digital assets, blockchain technology, and cryptocurrencies. The free zone offers a regulatory framework that supports innovation and entrepreneurship in the digital and virtual asset sector, allowing companies to operate with streamlined processes as well as various benefits, such as 100% foreign ownership, tax exemptions, and fewer bureaucratic hurdles. It must be noted, as an example of its innovativeness, that RAK DAO accepts crypto as a method of payment and facilitates access to bank accounts through their banking partnerships.

RAK DAO aims to attract startups and established firms involved in Web3 projects with a robust and transparent legislation that makes setting-up and operating a web3 company easy and straight forward. From IT to mining projects, all virtual assets projects are welcome: metaverses, DAOs, NFTs, DApps, gaming, e-sports, and third similar or alike projects related to disruptive technologies.

The RAK DAO operates as an Economic Free Zone with the authority to register companies and issue business licenses for activities that are not federally regulated. Entities planning to engage in virtual assets activities that can be traded or digitally transferred and can be used for investment purposes must obtain a Virtual Asset Service Provider license from the Emirates Securities and Commodities Authority (https://www.sca.gov.ae). This includes various VASP activities such as virtual asset platform operation, custody services, financial consulting, portfolio management, brokerage, and dealing of virtual assets ("VASP Activities").

Companies incorporated in RAK DAO can issue tokens, under certain scenarios, and subject to specific legal conditions, which include:

  • The submission of a detailed whitepaper.
  • Presentation of tokenomics.
  • Provision of a legal opinion on the nature of the token.
  • Completion of a cybersecurity audit of the smart contracts.

To further enhance its regulatory landscape, RAK DAO has introduced an innovative regulatory framework called the DAO Association Regime 2024. This framework offers a robust legal structure tailored specifically for Decentralized Autonomous Organizations ("DAOs"). It aims to govern permissionless blockchains, thereby facilitating the issuance of governance tokens. Furthermore, third-party projects—whether they are involved in VASP Activities or DAOs looking to engage in such services—can also create their own tokens. However, these entities must comply with federal regulations and obtain the necessary approvals from the Securities and Commodities Authority or the Central Bank of the UAE.

For further inquiries or assistance in navigating the regulatory aspects of incorporating a company in RAK DAO, our law firm stands ready to support your endeavors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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