Legal Insights
Reading Time: 8 min.
The UAE has cemented its spot as a global hotspot for crypto and Web3 businesses. With entrepreneur-friendly policies, a transparent regulatory framework, zero personal taxes, and low corporate taxes, it’s no wonder crypto founders worldwide are flocking to the Emirates.
But it’s not just about the tax perks. The UAE boasts a thriving crypto community, abundant VC funding, and one of the clearest regulatory regimes for virtual asset service providers (VASPs) currently available.
Put simply, it’s the ultimate launchpad for ambitious crypto projects.
As we roll into 2025, this guide cuts through the noise, offering practical insights to help you confidently and legally set up your crypto or Web3 company in the UAE.
Join our legal workshop to launch your crypto project in the UAE in 2025 with confidence and compliance.
🗓 Thursday, January 16, 2025
🕒 15:00 Dubai Time
#1 Defining the Business Model
Before starting your company, you need to outline your core activities, target market, regulatory requirements, timelinesand budget available. Start simple and focus on your primary activities to make it easier for the authorities to review and understand your application.
It’s important to assess whether your planned activities fall under regulated (e.g., VASP services, financial services) or unregulated categories under the UAE laws. Performing regulated activities without the necessary licenses can result in severe fines, penalties, and even criminal liability.
Pro Tip: Clearly document your business activities and be ready to explain them in detail. Ambiguity can slow down approvals, and incorrect classification can lead to serious consequences.
#2 Assessing Regulatory Regimes
The UAE has a multi-layered legal and regulatory structure that includes federal laws, emirate-level regulations, and free zone-specific frameworks. Each layer comes with its own set of rules, regulators, and requirements, making it essential to assess your business activities carefully.
Key Regulatory Frameworks:
- Federal Regulations: Governed by the Securities & Commodities Authority (SCA) and UAE Central Bank (CBUAE). The SCA is the primary regulator for virtual asset activities outside financial free zones, while the Central Bank regulatesstablecoins.
- Financial Free Zones: Two financial free zones exist in the UAE: Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC). These jurisdictions operate under distinct legal systems based on common law and have their own financial regulators: Financial Services Regulatory Authority (FSRA) at ADGM and Dubai Financial Services Authority (DFSA) at DIFC.
- Emirate-Level Regulations: VASP activities in the emirate of Dubai are regulated by the Virtual Assets Regulatory Authority (VARA).
- Commercial Free Zones and Offshore Free Zones: There are over 45 commercial free zones and 2 offshore free zones (RAK ICC and JAFZA), each zone has specific rules regarding business incorporation.
Key Considerations When Choosing a Regulatory Regime:
- Business Activity: Is your activity regulated or unregulated? Does it fall under federal or Dubai VASP regulatory requirements?
- Jurisdictional Suitability: Mainland, free zone, or offshore?
- Regulator Interaction: Which regulator would be most receptive to your business goals?
- Licensing Costs and Timelines: Each regulatory body has different processes, fees, and application durations.
Pro Tip: The UAE has five distinct virtual asset regulators, two financial free zones, 45+ free zones, and two offshore jurisdictions. Carefully map out your business activities against the most suitable regulatory regime to avoid costly delays or compliance issues.
#3 Company Incorporation
Once the regulatory assessment is complete, the next step is to decide where to incorporate your company: mainland, free zone, or offshore jurisdiction. Your choice will depend on your business model, regulatory requirements, and long-term goals.
Important Note: A trade license or business license is a basic document showing that your company is registered with the relevant registration authority (e.g., mainland authority or free zone authority). However, if your company plans to engage in regulated activities like virtual assets or financial services, you will also need a regulatory license from the appropriate regulator.
Many founders mistakenly assume that a trade license is equivalent to a regulatory license. This misconception often leads being overcharged for simple company formation services, as well as non-compliance.
Pro Tip: Work with specialized legal advisors who understand the UAE’s virtual assets and financial services regime and can guide you. Don’t rely on your neighbor who set up a bakery last year, they might know their dough, not your DAO; and corporate service providers are even worse when it comes to regulatory advice. Seven out of ten clients come to us after a botched company incorporation job.
#4 Applying for a Regulatory License
If your business activities are regulated, you’ll need to apply for a regulatory license under the framework selected in Step 2.
This process can take anywhere from 6 to 12 months, depending on the regulator and the complexity of your business model.
During this period, you’ll be required to submit an extensive suite of policies and procedures, including AML/CTF frameworks, operational manuals, and risk management protocols. Additionally, regulators will review and approve your key personnel, ensuring they have the qualifications and expertise to run a regulated business.
Pro Tip: Plan your regulatory licensing timeline carefully, and ensure your documentation is accurate and comprehensive from the outset. Delays often stem from incomplete or poorly prepared submissions.
#5 Residency Permits for Shareholders, Directors, and Managers
Founders and key team members planning to relocate to the UAE will need to obtain UAE visas and residency permits. These can be applied for through company ownership, property ownership, employment, or the prestigious Web3 Talent Golden Visa programme.
Pro Tip: An Emirates ID is required for everyone living in the UAE to rent an apartment, register a car in their name, and open a company or a corporate bank account. The Emirates ID is issued after obtaining an appropriate visa that allows you to live and work in the UAE. Start your residency application process early to avoid delays in your relocation plans.
#6 Bank Account Opening
While banking remains a challenge for crypto companies globally, the UAE has made efforts to transition towards a somewhat crypto-friendly banking environment. Currently, there are several banking options for unregulated companies and regulated VASPs. When applying for a bank account, have your business plan ready and all company documents in top-notch order before submitting your application.
Pro Tip: Always use regulated fiat on-off ramps when selling crypto and transferring funds into a bank account. I personally use CoinMENA; they hold all the appropriate VASP licenses in the UAE and have a solid track record. Whatever the case, do not use unregulated shops or a “friend of a friend”, a lot of people are getting scammed this way.
#7 Corporate Tax Registration
Since June 2023, businesses in the UAE are subject to a 9% Federal Corporate Tax on profits and capital gains. SMEs enjoy tax relief for revenues up to AED 3 million. All companies, including free zone and mainland companies, must register for corporate tax, as well as individuals conducting business under freelance or sole trader business licenses.
Free zone companies are also subject to corporate tax unless they meet the requirements, where most of their revenue comes from other free zone entities.
Pro Tip 1: While individuals remain tax-free in the UAE, your home country might require you to produce a tax residency certificate to confirm your tax residency status in the UAE. This certificate can be applied for after spending 183 days in the UAE within a calendar year.
Pro Tip 2: Register for corporate tax early and stay updated on filing deadlines to ensure full compliance.
Bonus Point – Ongoing Compliance
All companies in the UAE must meet ongoing obligations, including:
⠀
• Accounting and audits: Ensure financial records are accurate and comply with IFRS accounting standards.
• Tax filings: Submit corporate tax returns on time to avoid penalties and legal consequences.
• AML/CTF compliance: Maintain anti-money laundering and counter-terrorism financing protocols as per the regulations applicable to their business.
• Data protection: Adhere to data privacy laws to safeguard customer and company data.
• License renewals: Keep your business and regulatory licenses up to date.
• Employment laws: Comply with UAE employment and wage laws applicable to your company.
• Crypto Marketing laws: Follow UAE regulations related to token marketing, KOL activity, and crypto event exhibitions.
Pro Tip: Create a compliance calendar to track key deadlines and responsibilities.
Launching and scaling a crypto business in the UAE depends a lot on the right regulatory strategy. Success here hinges on understanding the regulatory environment and aligning with compliant frameworks, but also navigating the customs and traditions, for example do not plan meetings on Friday afternoons, that’s just rude IFYYK.
From securing the right licenses to building strong local partnerships, every step requires careful planning and informed execution. The rewards, however, for those who get it right, are immense -access to a thriving ecosystem, global investors, and a forward-thinking regulatory approach.
