Ras Al Khaimah, one of the seven emirates that make up the UAE, 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 non-regulated activities in the virtual assets sector.” Applications will open in the second quarter of 2023, the statement said.
The free zone would be dedicated to digital and virtual assets service providers in emerging technologies, such as the 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 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 solely dedicated 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 businesses and have their own tax schemes and regulatory frameworks, with the exception of the UAE’s criminal law.
Drawing up what the new free zone’s steps would be, Dubai-based crypto lawyer Irina Heaver thinks “RAK DAO will start with non-financial activities first, then may introduce the financial activities at a later stage.” She added:
“[Entrepreneurs] won’t be able to launch a crypto exchange just yet, which is an ESCA-regulated financial activity.”
The Securities and Commodities Authority (SCA) is one of the UAE’s main financial regulators. According to the country’s latest federal-level virtual assets law, the SCA has authority throughout the Emirates, except for the financial free zones — the 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 numerous crypto, blockchain and Web3 firms, including the Dubai Multi Commodities Centre (DMCC), Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM).
The UAE has painted itself as a forward-thinking hub for crypto firms eyeing jurisdictions with friendlier regulations. In March last year, Dubai unveiled its virtual assets law, along with the Virtual Asset Regulatory Authority (VARA), to protect investors and provide standards for the digital asset industry.
In September, the Financial Services Regulatory Authority, the regulator of the ADGM, published its guiding principles on its approach to regulating and overseeing the new asset class and its service providers.