Quick Facts:

• RAK launched DARe framework in October 2024

• ADGM offers DLT Foundation structure

• Most projects still use hybrid models

• Setup costs from $3,000 (RAK)

Can You Actually Set Up a DAO in the UAE?

Yes and no. Let's be clear about what's possible today.

The UAE has launched legal frameworks for DAOs - RAK's DARe went live in October 2024, and ADGM has DLT Foundation regulations. These promise legal personality, bank accounts, and liability protection for DAOs. Sounds perfect, right?

But here's what we typically recommend: start with a hybrid structure. Why? It gives you flexibility while these new frameworks prove themselves in practice. Every project is different, but most clients find hybrid models offer the best of both worlds.

What's a Hybrid DAO Structure?

Think of it as having your cake and eating it too. You set up:

• A traditional UAE company (for banking, licenses, operations)

• Your DAO structure (often elsewhere or decentralized)

• Legal agreements connecting them

This way, you get UAE's benefits, some of which include low / no tax, banking access, VASP licensing, without putting all your eggs in one regulatory basket. If regulations change? You can adapt without rebuilding everything.

What Are the New UAE DAO Frameworks?

RAK's DARe - What Does It Offer?

Launched October 2024, DARe promises two options:

• Startup DAO: Under 100 members, simplified regulations

• Alpha DAO: Over $1M treasury, more sophisticated framework

Cost? Starting from $3,000. Compare that to Switzerland's $46,000, and you see the appeal. Remote setup is possible, no need to fly to the UAE.

ADGM's DLT Foundation - How's It Different?

ADGM takes a financial services approach. Their DLT Foundation structure integrates with their existing financial ecosystem. Better for projects needing investment fund structures or complex financial operations.

Should You Use These New Frameworks?

Depends on your risk tolerance and timeline.

Consider direct DAO registration if:

• You want to be an early adopter

• Your project is simple and contained

• You're comfortable with regulatory uncertainty

• Cost is a major factor

Stick with hybrid structures if:

• You need proven banking relationships

• Your investors prefer familiar structures

• You want flexibility to relocate

• You're handling significant funds

Most of our clients? They choose hybrid structures. But we evaluate case by case.

How Do Banking and Licenses Work?

Will Banks Actually Open DAO Accounts?

RAK and ADGM say yes. Reality? Banks are cautious. With a hybrid structure, you're opening accounts for a traditional company, much smoother. Pure DAOs might face more scrutiny, longer approval times, or outright rejections.

Do You Need a VASP License?

If you're considered to be handling virtual assets in the UAE, absolutely. Doesn't matter if it's a DAO, traditional company, or hybrid, VARA and ADGM require licensing for certain crypto activities.

The good news? VASP licensing is well-established. Unlike DAO frameworks, this part of UAE regulation is mature and clear.

What About Taxes and Compliance?

Low / Zero Tax - Is It Real?

Yes. Free zone companies pay low / zero corporate tax. No personal income tax either. Since November 2024, crypto transactions are VAT-exempt too. This applies whether you use a DAO framework or traditional structure. However, VAT still applies if you are selling goods or services and accept crypto as payment, the VAT is calculated on the AED value of what you sell, even if the customer pays in digital assets.

What Compliance is Required?

Every structure needs:

• AML/KYC procedures

• Financial reporting

• Substance requirements

• Annual filings

DAOs aren't exempt. In fact, proving compliance might be harder with pure DAO structures since processes are still being developed.

What's Our Actual Recommendation?

For most projects: Start with a hybrid structure.

Set up a UAE free zone company (RAK, ADGM, or Dubai) to handle:

• Banking relationships

• VASP licensing

• Regional operations

• Investor relations

Then structure your DAO component based on your specific needs:

• Pure decentralization (no legal wrapper)

• Marshall Islands DAO

• Swiss association

• Or even UAE DARe (if you're adventurous)

This isn't one-size-fits-all. A DeFi protocol has different needs than a venture DAO. An NFT project differs from a Layer 1 blockchain. We assess each case individually.

How Long Does Setup Take?

Hybrid structure timeline:

• Week 1-2: Structure planning and documentation

• Week 3-4: UAE company formation

• Week 5-6: DAO structuring (if using legal wrapper)

• Week 7-8: Banking applications

• Week 9-12: Begin VASP licensing process (if needed)

Pure UAE DAO timeline:

• Faster setup (2-4 weeks)

• But banking and operations might take longer

What Are the Real Costs?

Hybrid structure:

• UAE company: $5,000-20,000

• DAO structuring: $15,000-50,000

• Legal agreements: $10,000-50,000

• Total: $30,000-120,000

Pure UAE DAO (DARe):

• Setup: From $3,000

• But add banking delays, potential restructuring costs, and uncertainty premium

Cheaper upfront doesn't always mean better value.

Common Questions We Get

Why not just use the new DARe framework?

It's new. Very new. While promising, we haven't seen enough successful implementations to recommend it for every project. Early adopters might benefit, but most clients prefer proven structures.

Can we switch from hybrid to pure DAO later?

Absolutely. That's the beauty of hybrid structures - flexibility. Once UAE frameworks mature and prove themselves, transitioning is straightforward.

What about ADGM vs RAK for the UAE component?

ADGM costs more but offers sophisticated financial services integration. RAK is cost-effective and faster. Dubai (VARA) leads in pure crypto operations. Again, depends on your specific needs.

Do we really need legal help?

You're navigating two regulatory systems (UAE and wherever your DAO sits), plus the connection between them. The complexity isn't just legal - it's practical. Which banks will work with you? How do you handle taxes? What about investor concerns? Experience matters here.

What if regulations change?

They will. That's why we recommend flexible structures. The crypto regulatory landscape evolves monthly. Your structure should be able to evolve with it.

What Should You Do Next?

First, be honest about your priorities:

• Need banking and operations today? Hybrid structure

• Want to be a regulatory pioneer? Consider pure DAO frameworks

• Unsure? Let's discuss your specific situation

The UAE offers incredible advantages for blockchain projects - zero tax, clear VASP licensing, strategic location. The question isn't whether to have UAE operations, but how to structure them.

Every project is unique. What works for a DeFi protocol might not suit a gaming DAO. An investment DAO has different needs than a protocol DAO.

Get Your DAO Structure Right from Day One

Want to explore your options? We've guided dozens of DAOs through these decisions. Book a free consultation today to discuss your specific project and get a clear roadmap for structuring your DAO operations. Let's build something that works today and adapts for tomorrow.