- UAE’s new framework gives DAOs legal status, enabling off-chain asset and bank ownership.
- RAK’s DARe framework offers tailored legal models for DAOs of varying sizes and maturity.
- UAE stablecoin regulation mandates backing with cash or bonds, ensuring financial security.
The United Arab Emirates is set to regulate decentralized organizations with a new system designed for DAOs. In addition, the Ras Al-Khaimah (RAK) emirate has launched the DAO Association Regime, providing the legal structure for DAOs to operate within the RAK Digital Assets Oasis free zone.
DAOs have faced legal hurdles when interacting with off-chain entities. A key challenge has been the lack of legal recognition, which prevents DAOs from opening bank accounts or holding assets outside of blockchain ecosystems.
New Framework Bridges On-Chain and Off-Chain Operations for DAOs
And now with the new framework, DAOs can now open bank accounts and own on-chain and off-chain assets. This represents a significant step forward for DAOs, which have been excluded from traditional financial systems.
The DARe framework allows DAOs operating within the RAK Digital Assets Oasis free zone to engage with off-chain entities like financial institutions and other businesses.
Luc Froehlich, Chief Commercial Officer of RAK DAO, explained that this legal structure is a key part of RAK Digital Assets Oasis’s strategy to become a global hub for digital assets.
Two Models Cater to Different DAO Sizes and Stages
The DARe system offers two models for DAOs at different stages of development. New DAOs with fewer than 100 members have access to a streamlined process, simplifying operations for smaller organizations.
Read also: UAE to Introduce Legal Structure for DAOs, Strengthening Crypto Hub Status
Mature DAOs with treasuries over $1 million follow a more complex set of rules designed to address the complexities of larger organizations. This two-tiered approach ensures that DAOs of all sizes can operate in a regulated environment.
UAE Expands Regulatory Efforts to Stablecoins
The UAE’s regulatory efforts go beyond DAOs. The Central Bank of the UAE (CBUAE) has approved AED Stablecoin, the region’s first fully regulated dirham-pegged stablecoin issuer, as part of its Payment Token Service Regulation.
Although algorithmic stablecoins and privacy tokens remain prohibited, stablecoin issuers must fully back their tokens with cash or a combination of cash and government bonds, guaranteeing financial security and aligning with the UAE’s Digital Government Strategy 2025.
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