- New DAO regulations encourage legal identity and asset ownership.
- UAE provides a low-cost DAO setup, encouraging global involvement.
In a significant step forward for blockchain innovation, the UAE has announced intentions to create a legal framework for decentralized autonomous organizations (DAOs) through the Ras Al Khaimah Digital Assets Oasis (RAK DAO). This initiative aims to allow even the smallest DAOs to operate lawfully in the UAE, hence providing a suitable environment for decentralized governance and the Web3 ecosystem.
NeosLegal, working together with RAK DAO, will present the framework at the forthcoming DAO Legal Clinic on October 25th. Irina Heaver, a lawyer at NeosLegal, stated that this framework will clarify the compliance criteria for DAOs. She also noted that it will have significant implications for the UAE’s decentralized governance ecosystem.
Major Highlights of the New DAO Legal Framework
The new legal framework seeks to solve critical legal and governance issues, such as establishing a legal identity for DAOs. It will lay out standards for taxes and subsidies, as well as allow DAOs to possess both on-chain and off-chain assets. This structure also contains legal protections for DAO founders, members, and contributors, which protects them from personal liability. Furthermore, it allows DAOs to enter into legally binding contracts and creates procedures for resolving internal and external disputes.
One of the most novel aspects of this new system is the possibility to register DAOs in the UAE regardless of their physical location. This suggests that DAOs can be established remotely, attracting people from all over the world who are interested in the UAE’s growing virtual asset market. The framework is intended to make it easier for these organizations to open bank accounts, thus increasing their operational capacity.
According to Heaver, this regulatory framework sets the UAE as the premier location for blockchain and digital asset investment, attracting innovators and developers from all over the world. The cost of establishing a DAO in the UAE is much lower than in jurisdictions such as Switzerland. Establishing a DAO in Switzerland can range from $45,000 to $46,000. In contrast, the UAE offers a significantly lower minimum launch cost of just $3,000. This affordability is vital for smaller DAOs that seek to operate legally and securely.
With this initiative, the UAE aspires to strengthen its position as a digital asset innovation hub, pave the path for future blockchain technology development and attract foreign talent to the region. Adopting appropriate laws for DAOs strengthens the regulatory framework, fostering a more secure landscape for digital assets. This legal clarity also creates an environment conducive to innovation within the sector.
The evolving legislative landscape in the UAE marks a pivotal moment with the establishment of a legal framework for DAOs. This development significantly supports the growth of decentralized organizations within the region.
