Ras Al Khaimah, one of the seven emirates of the United Arab Emirates (UAE), is set to launch a free trade zone for digital and virtual asset companies. This is a further indication that the country remains attractive to international players in the crypto world.
Free trade zones in the UAE are areas where entrepreneurs own 100% of their businesses and where different regulatory frameworks and tax regimes apply.
First free trade zone for digital assets
The RAK Digital Assets Oasis (RAK DAO) will become a “specially developed, innovative free zone for unregulated activities in the virtual asset industry”. According to the statement, applications for the zone will open in the second quarter of 2023.
The free trade zone is intended for service providers working with digital and virtual assets in emerging technologies. This includes metaverse, blockchain, utility tokens, crypto wallets, NFTs, decentralized autonomous organizations (DAOs), decentralized applications (DApps), and other Web3-related businesses, among others.
We are building the free zone for companies of the future. As the world’s first free zone dedicated solely to digital and virtual asset companies, we look forward to supporting the aspirations of entrepreneurs from around the world.
— Sheikh Mohammed bin Humaid bin Abdullah Al Qasimi
Free trade zones are areas where entrepreneurs own 100% of their businesses and have their own tax regimes and regulatory frameworks, excluding UAE criminal law.
Dubai-based crypto lawyer Irina Heaver said:
RAK DAO will start with non-financial activities first and will introduce the financial activities at a later stage. Entrepreneurs will not yet be able to launch a crypto exchange, which is an ESCA-regulated financial activity.
Regulators in the UAE
The Securities and Commodities Authority (SCA) is one of the major financial regulators of the UAE. Under the latest federal law, the SCA has authority throughout the Emirates, excluding the Financial Free Zones. These are the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Center (DIFC) and others. These have their own financial supervisors.
The new free zone adds to the country’s more than 40 multi-disciplinary free zones that have attracted numerous crypto, blockchain and Web3 companies, including the Dubai Multi Commodities Center (DMCC), DIFC and the ADGM.
The UAE has established itself as a forward-thinking hub for crypto companies that have jurisdictions with friendlier regulations. In March 2022, Dubai unveiled its virtual asset law, along with the Virtual Asset Regulatory Authority, to protect investors and provide standards for the digital asset industry.
In September 2022, the Financial Services Regulatory Authority issued guiding principles on its approach to regulating and supervising the new asset class.