The Ras Al Khaimah Digital Assets Oasis (RAK DAO), a free economic zone in the United Arab Emirates focused on digital assets, is set to introduce a legal framework for decentralized autonomous organizations (DAOs).
In an announcement sent to Cointelegraph, law firm NeosLegal and RAK DAO said the new regime will be introduced and discussed at the DAO Legal Clinic on Oct. 25.
Irina Heaver, a partner at NeosLegal, told Cointelegraph that the framework is expected to clarify how DAOs can remain legally compliant, which she said will significantly impact decentralized governance and the broader Web3 ecosystem in the UAE.
Legal wrapper for DAOs
RAK DAO’s announcement noted that the new framework will address legal and governance requirements for DAOs, including establishing a legal structure.
The announcement highlighted that the legal structure will clarify tax obligations and benefits. It will also enable property ownership of onchain and offchain assets and provide legal protection from personal liability for DAO founders, members and contributors.
The free economic zone added that the framework will also enable DAOs to enter legally binding contracts and establish guidelines for resolving internal and external disputes.
Related: Regulation by enforcement leads to ‘exodus’ of talent — RAK DAO exec
Remote establishment of DAOs in the UAE
Heaver told Cointelegraph that DAOs can be registered in the UAE under the new regime without being physically in the country. DAOs can be “established remotely,” Heaver noted.
The UAE-based crypto lawyer added that these organizations will be able to open bank accounts. “This remote accessibility makes it easier for global participants to engage with the UAE’s burgeoning virtual assets sector,” Heaver added.
The lawyer said introducing the legal framework would enhance the UAE’s position as a global hub for blockchain and digital asset innovation, attracting entrepreneurs and developers.
DAO legal wrappers can also be established in Switzerland. While Switzerland has no particular regulations for DAOs, it also allows DAOs to be set up in its jurisdiction through a legal wrapper.
Still, the lawyer told Cointelegraph that establishing a DAO legal wrapper in the UAE would be more cost-effective. Heaver said that in Switzerland, a DAO setup may cost as much as $46,000, while in the UAE the process would start at $3,000.
“This affordability allows even the smallest DAOs to protect themselves and operate within a legal framework,” Heaver added.
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