The United Arab Emirates (UAE) is preparing to introduce a legal framework that will enable decentralized autonomous organizations (DAOs) to operate legally within the country. This move is expected to significantly impact the governance of DAOs and strengthen the broader Web3 ecosystem in the region.
RAK DAO’s Legal Framework for DAOs
The new legal framework will be unveiled by the Ras Al Khaimah Digital Assets Oasis (RAK DAO), a free economic zone in the UAE focused on digital assets. According to Irina Heaver, a partner at NeosLegal, this framework will provide clarity on how DAOs can comply with legal requirements, ensuring that even smaller DAOs can operate legally. Heaver shared these details ahead of the DAO Legal Clinic, scheduled for October 25, where the framework will be discussed.
Legal Protection and Structure for DAOs
The framework aims to create a legal structure for DAOs, addressing crucial governance aspects. This includes clarifying tax obligations and benefits, allowing DAOs to own both onchain and offchain assets, and offering legal protection for founders, members, and contributors against personal liability. These steps are designed to give DAOs greater legal certainty, which is expected to encourage more organizations to operate within the UAE.
Moreover, the legal framework will allow DAOs to enter legally binding contracts and provide clear guidelines for resolving internal and external disputes. This will help legitimize DAOs in business operations and governance, furthering their integration into mainstream economic activities.
The introduction of a legal framework for DAOs in the UAE marks a significant step toward formalizing decentralized governance. By providing legal clarity and protections, the UAE aims to position itself as a global hub for digital assets and Web3 innovation, offering DAOs a secure and structured environment to thrive.
