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UAE emirate will open free zone for companies dealing in digital and virtual assets

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In the United Arab Emirates, free-trade zones are places where business owners own 100% of their companies and enjoy unique legal and tax structures.

While the nation’s approach to the industry continues to draw in international crypto players, Ras Al Khaimah, one of the United Arab Emirate’s (UAE) seven Emirates, is getting ready to introduce a free zone for businesses dealing in digital and virtual assets.

A “purpose-built, innovation-enabling free zone for unregulated operations in the virtual assets sector,” the RAK Digital Assets Oasis (RAK DAO) will be. The statement stated that applications would be available in the second quarter of 2023.

The free zone will be reserved for companies that provide services for digital and virtual assets in cutting-edge fields like the metaverse, blockchain, utility tokens, virtual asset wallets, nonfungible tokens (NFTs), decentralized autonomous organizations (DAOs), decentralized applications (DApps), and other Web3-related enterprises.

Sheikh Mohammed bin Humaid bin Abdullah Al Qasimi, chairman of the RAK International Corporate Centre, the operator of the new free zone, said:

We are developing the free zone of the future for enterprises of the future. Being the first free zone in the world exclusively for businesses dealing in digital and virtual assets, we look forward to assisting international entrepreneurs in achieving their goals.

Free zones, also known as free trade zones, are places where business owners own 100% of their companies, have control over their own tax policies, and are not subject to UAE law’s penal code.

Irina Heaver, a cryptocurrency lawyer based in Dubai, has outlined the procedures for the new free zone and believes that “RAK DAO would start with non-financial activity initially, then may include the financial operations at a later date.[Entrepreneurs] won’t be able to create a crypto exchange just yet, which is a financial activity regulated by ESCA,” she continued.

 

One of the key financial authorities in the UAE is the Securities and Commodities Authority (SCA). The SCA has jurisdiction throughout the Emirates, with the exception of the financial free zones, such as the Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC), which have their own financial regulators, according to the nation’s most recent federal-level virtual assets law.

The new free zone joins the nation’s more than 40 multifunctional free zones, such as the Dubai Multi Commodities Centre (DMCC), DIFC, and the ADGM, that have drawn several blockchain, cryptocurrency, and Web3 enterprises.

The UAE has positioned itself as a cutting-edge centre for cryptocurrency companies searching for nations with more lenient legislation. To safeguard investors and provide rules for the digital asset sector, Dubai introduced its virtual assets law and the Virtual Asset Regulatory Authority in March 2022.

The Financial Services Regulatory Authority, which oversees the ADGM, announced guiding principles in September 2022 outlining how it would regulate and monitor the new asset class and its service providers.

UAE free zone should investigate accepting Bitcoin for service payments, lawyer claims

According to a lawyer involved in the hub’s establishment, Ras Al Khaimah’s recently announced free zone for virtual asset corporations will investigate allowing cryptocurrency payments from businesses considering establishing their operations in the emirate.

Irina Heaver, a cryptocurrency lawyer based in Dubai, told reporter that the Ras Al Khaimah Digital Assets Oasis (RAK DAO) will look into accepting cryptocurrency payments, such as Bitcoin and stablecoins, for corporate registrations, office rent, and other services once it secures the appropriate partners.

She said, “After all, Swiss cities and cantons have been doing this for years.” Heaver went on to say that the system must have the proper technical and regulatory infrastructure in place in order for it to function, but he added that the “groundwork has been placed.” The attorney added that RAK DAO would consider running complete Bitcoin and lightning nodes to help the crypto payment scheme. “Activities in this area are ongoing, and we welcome technological partners to join us on this path,” she continued.

 

The Ras Al Khaimah emirate’s free zone for virtual asset companies aims to promote both legal and unregulated enterprises

RAK DAO, which was first announced at Blockchain Life 2023, would be a designated free zone for companies that provide services for digital and virtual assets, including those involved in the metaverse, blockchain, utility tokens, digital wallets, nonfungible tokens, decentralized autonomous organizations (DAOs), decentralized applications, and other Web3-related businesses.

Heaver revealed that RAK DAO is looking into “building the right legal wrapper for DAOs,” among other things, adding that the new free zone seeks to support both regulated and unregulated businesses.

The “entire chain of enterprises in the virtual assets field” will also be served by the new free zone, according to Heaver. Unlike other free zones, which only permit a small number of activities, this one may support the entire sector. She continued:

I have to structure numerous entities in numerous jurisdictions. This makes things more expensive and takes more time, which is bad for business. I now see a fantastic potential for business owners to base their operations in one place.

There are more than 40 free zones in the United Arab Emirates, including the Dubai International Financial Center and the Dubai Multi Commodities Centre (DMCC) (DIFC). Heaver asserted that Ras Al Khaimah’s free zone would be a “wonderful place for new enterprises” due to the emirate’s 50% lower living and business costs than Dubai. Via its own organizations and connections, the government will also help virtual asset service providers (VASPs) with their banking needs, the attorney claimed.

 

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