RasAl-Khaimah(RAK),oneoftheemiratesintheUnitedArabEmirates,hasintroducedanewlegalframeworktailoredfordecentralizedautonomousorganizations(DAOs)withinitsfreezonedesignatedfordigitalassets.
TheDAOAssociationRegime(DARe)seekstocreatealegalframeworkthatistailoredtothefunctioningandmanagementofDAOs.AccordingtoLucFroehlich,theChiefCommercialOfficerofRAKDAO,theinitiativestrengthensthepossibilityofDAOsintegratingwiththetraditionaleconomy.
Thislegalstructureallowssuchorganizationstoperformcertainfunctions,includingobtainingbankaccountsandhandlingonandoff-chainassets.DAOsaredigitalorganizationsthatworkthroughsmartcontractsonblockchaintoautomatethegovernanceandbusinessprocesses.However,therearemanylegalissuesthathampertheirprogress.
TheprotocolisdesignedtoaccommodatetwotypesofDAOs.theStartupDAOandAlphaDAO.TheStartupDAOmodelisaimedatprojectswith100orfewermembers.Itseekstorationalizethelegalprocedurestoestablishbusinessinordertoenablenewenterprisestofocusontheirgrowthinalessbureaucraticenvironment.
Ontheotherhand,theAlphaDAOModelisdesignedforDAOsthathaveatreasurysizeofmorethan$1million.Thismodelofferstheseorganizationskeyresourcesanddirectiontoexpandtheiroperationsintherightmanner.
Taxbenefitsandlegalprotectiondriveframeworkvalue
ThemajorbenefitsoftheDAReframeworkaretaxoptimizationandlegalcertainty.ThisframeworkisconsistentwiththeUAE’splanstostrengthenitsdigitaleconomiesandattractatalentpoolfromaroundtheworld.
Inadditiontotheregulatorycertainty,DARehasthepotentialtobringeconomicvaluetoRAK.WithmoreDAOsemerging,theyhelpcreatejobs,openopportunitiesforinvestments,andimprovetechnologyinthearea.
AstheUAEcontinuestoenhanceanddevelopitslegalframeworkinsupportofWeb3anddigitalassets,othercountries,suchasItaly,havetakentheoppositedirection.Italyrecentlyintroducedacapitalgainstaxoncryptocurrencies,whichmaydiscourageinvestmentinthesector.Additionalandrecentlegaldevelopments,suchastheonesfromtheVirtualAssetRegulatoryAuthority(VARA)ofDubai,showtheUAE’ssupportforthevirtualassetsindustry.
AspreviouslyreportedbyCryptopolitan,between2023and2024,theUAEreceivedmorethan$30billionincryptocurrencyinvestments.Additionally,itrankedamongstthetop40economiesworldwideandisthethird-largestcryptoeconomyintheMENAregion.
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