Abu Dhabi, the UAE's second-most populous emirate, has taken the first steps to legalize the operations of decentralized entities such as DAOs.
Abu Dhabi has unveiled a new regulatory framework for decentralized autonomous organizations (DAOs) and other entities built on distributed ledger technology (DLT), marking the first push toward such a framework by a Middle Eastern territory, the Registration Authority of Abu Dhabi Global Market (ADGM) said Thursday in a statement.
The framework, effectively immediately, enables DAOs, which have long operated within a legal grey area, to operate legally and issue tokens to their members.
Distributed ledger technology, which provides the basis for blockchain networks, is a system of recording and storing information on different ledgers within a network to ensure data accuracy and security.
The move forms part of a larger initiative to "foster initiatives in the broader blockchain and digital asset realm" in Abu Dhabi, the United Arab Emirates’ second-most populous territory after Dubai.
Abu Dhabi is vying to become a crypto hub alongside Dubai as the UAE embraces the digital assets sector and has a regulatory framework that can be valuable for firms looking for regulatory clarity, in contrast to elsewhere in the world.
"The new regime serves as a driving force for positive change in the digital assets sector," ADGM Chairman Ahmed Jasim Al Zaabi said in a statement.
"By transforming the blockchain and Web3 landscape, we are moving towards a future characterized by setting global benchmarks with enhanced transparency and efficiency,” he added.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.