Recently we had a client looking to launch a large NFT (Non-Fungible Token) project and as part of the brief we were required to look closely at Incorporation Options in the UAE (United Arab Emirates) for such an Enterprise.
The main question to be considered in such a case is which free zone would be most suitable? There are a number of Free Zone Incorporation Options in the UAE – finding the one most suitable for a particular client’s business model can be a challenging and indeed time consuming process… a bit like plotting a sailing course across an exotic never-before-sailed ocean!
First up let’s do an overview of the potential zones and the related crypto/NFT activities as per the latest guidelines and available regulated companies…
We would like to initially present the environment for such activity and also to inform that first, in the respective free zone, a company should be established with the activity of software house, consulting, IT services. Then later the client can apply for further licenses ie in case the client is wishing to set up a regulated activity (see below).
In Dubai, to open a regulated Cryptocurrency related business establishment, the investor has to register a company in one of the supported zones (which are DMCC, DAFZA , Sharjah Research Technology or ADGM in Abu Dhabi) and then apply for/obtain a Cryptocurrency License to operate such business activities.
Another potential option for incorporation of a business in the UAE would be in one of the smaller zones such as the Meydan or Media City Free Zone etc wherein a free zone license can be done within 4-5 days
With the Cryptocurrency License all customers can be offered cryptocurrency-related services , such as storage, management, trading, Bitcoin solutions, software applications, advisory, services, etc.
Cryptocurrency license in the UAE are currently governed by stringent regulations from the UAE Government as well as the Central Bank. In order to get the license, the client would need to comply with the following requirements:
- There must be enough capital to operate the business for at least 6 months successfully
- A strict KYC Norm has to be adhered to
- Disclosure to Value-Added-tax, Anti-Money laundering, and other Government authorities on request must be fulfilled
- Secured information of client’s financial information – safeguarding against cybersecurity
The above can be considered as time consuming and as costly as any other brokerage licensing procedure but is doable if you have the right contacts (eg OCI has a colleague in the UAE who has been recognized/approved by ADGM and DIFC to act as executive and non executive director for such businesses). Hence if/when you decide to move further with such an application you’ll be pleased to know that we have good experience and success in respect of brokerage licenses already to fall back on!
The UAE has also taken a step forward in legalizing NFTs following the announcement of issuing crypto licenses. However as mentioned, at that point the smart client would choose to firstly set up a company in one of the above-mentioned zones and open a bank account (as later it is more difficult with such licenses). Then, if necessary, we can move on with the licensing procedure.
At that stage we would typically suggest that the client sets up a company in DMCC, DAFZA or in Sharjah (with the right contacts this can be done within 1-2 weeks potentially).
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.com
DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.
