Emirate launches free zone for digital and virtual asset firms
Ras Al Khaimah, one of the seven emirates that make up the United Arab Emirates, is set to launch a free zone for digital and virtual asset companies as the country’s approach to the industry continues to attract global crypto players.
The RAK Digital Assets Oasis (RAK DAO) will be a “purpose-built, innovation-enabling free zone for unregulated activities in the virtual assets sector.” Applications will open in the second quarter of 2023, the statement says.
The freezone will be dedicated to digital and virtual asset service providers in emerging technologies, such as metaverse, blockchain, utility tokens, virtual asset wallets, NFTs, DAOs, dApps and other Web3-related businesses.
“We are building the free zone of the future for the companies of the future,” said Sheikh Mohammed bin Humaid bin Abdullah Al Qasimi, chairman of RAK ICC, the operator of the new free zone. “As the world’s first free zone dedicated exclusively to digital and virtual asset companies, we look forward to supporting the ambitions of entrepreneurs from around the world.”
Free zones or free trade zones are areas where entrepreneurs have 100% ownership of their business and have their own tax regimes and regulatory framework, with the exception of the UAE’s criminal law.
Outlining what the steps to the new free zone will be, Dubai-based crypto lawyer Irina Heaver believes “RAK DAO will start with non-financial activities first, and then may introduce the financial activities at a later stage.” She added:
“[Entrepreneurs] will not be able to launch a crypto exchange yet, which is an ESCA regulated financial activity.”
The Securities and Commodities Authority (SCA) is one of the UAE’s main financial regulators. Under the country’s latest virtual assets law at the federal level, the SCA has authority throughout the Emirates, except for the financial free zones – ADGM and DIFC, which have their own financial regulators.
The new free zone adds to the more than 40 multidisciplinary free zones in the country that have attracted a number of crypto, blockchain and Web3 firms, including Dubai Multi Commodities Center (DMCC), Dubai International Financial Center (DIFC), Abu Dhabi Global Market (ADGM).
The UAE has painted itself as a forward-looking hub for crypto firms looking at jurisdictions with friendlier regulations. Last March, Dubai unveiled the Virtual Assets Law, together with the Virtual Asset Regulatory Authority (VARA), to protect investors and deliver standards for the digital asset industry.
In September, the Financial Services Regulatory Authority, the regulator of ADGM, published its guiding principles for its approach to regulating and supervising the new asset class and its service providers.
