Why do exchanges like OKX and Bybit choose to establish companies in Dubai?
TechFlow Selected TechFlow Selected
Why do exchanges like OKX and Bybit choose to establish companies in Dubai?
Why is Web3 so bullish on Dubai?
Navigating Web3 tides with focused insightsAuthor: Jin Jianzhi, ManQin Law Firm
On October 10, OKX CEO Star Xu personally traveled to Dubai to announce the launch of the first full operational license for a cryptocurrency trading platform in the United Arab Emirates (UAE). This news not only marks a milestone in OKX's global compliance journey but also signifies that OKX is poised to expand its business footprint in Dubai—the Web3 startup hotspot—and gain a strategic advantage in the UAE market.
Coincidentally, during Singapore’s TOKEN2049 event, Wu Shuo interviewed Bybit CEO Ben Zhou. In the interview, Ben highlighted that Bybit had already relocated its global headquarters to Dubai back in 2023. Over a year later, both Bybit and Ben remain strong advocates for Dubai among Web3 entrepreneurs: "Our experience with Dubai—or the UAE as a whole—is that they view the crypto industry as an opportunity. They recognize that oil won’t last forever and are eager to attract more fintech and cutting-edge technologies. As a result, every level of government and department welcomes us and offers substantial policy support—something entirely different from many other regions. Dubai doesn't just offer support; it provides practical benefits like visas, making you genuinely feel welcome."
In fact, over the past two years, the Middle East—especially Dubai—has consistently ranked among the top destinations for Web3 projects expanding overseas. ManQin Law frequently receives inquiries from Web3 founders about Dubai's crypto regulations and company setup procedures. Previously, we published a comprehensive guide titled “Oasis of Crypto in the Desert: An Overview and Application Guide to Dubai’s VASP License.” This article serves as a step-by-step guide for Web3 entrepreneurs looking to establish their companies in Dubai. But first, let’s explore why Dubai has become such a favored destination for Web3 innovators.
Traditional Advantages of Dubai
Today, numerous well-known multinational corporations—including Procter & Gamble, Microsoft, Adidas, and Nestlé—have established their MENA (Middle East and Africa) regional headquarters in Dubai. Chinese enterprises, particularly state-owned companies, also favor Dubai as a key international expansion hub. These trends stem from Dubai’s long-standing "traditional advantages."
* Chinese companies that have set up operations in Dubai
Strategic Geographic Location
Dubai sits at the crossroads of Europe, Asia, and Africa, enabling businesses to serve markets across the Middle East, Africa, South Asia, and Europe.
Dubai operates on Gulf Standard Time (GMT+4), which allows seamless coordination with business hours in Europe, Asia, and Africa. The time difference ranges from 3 to 4 hours with Europe and 1 to 4 hours with Asia, facilitating real-time communication and transactions across continents.
Favorable Tax and Fiscal Policies
Dubai imposes no personal income tax, payroll tax, capital gains tax, or inheritance tax.
For most businesses, corporate income tax applies only when profits exceed 375,000 AED (approximately 700,000 RMB), taxed at a low rate of 9%. Compared to other jurisdictions—such as Hong Kong (16.5%) and Singapore (17%)—this rate remains highly competitive. Companies below the threshold enjoy zero taxation. Additionally, firms registered in free zones benefit from a 50-year or longer corporate tax exemption if their income originates within the free zone or from international markets. The standard VAT rate is just 5%.
No Foreign Exchange Controls
In Dubai, foreign currency can be freely bought, held, and transferred. Businesses can conduct cross-border transactions effortlessly through Dubai’s open financial system without complex approval processes. This freedom makes Dubai especially attractive for fintech and payment-focused Web3 ventures.
For Web3 companies operating in payments, Dubai’s absence of foreign exchange restrictions creates an exceptionally flexible operating environment.
Free Profit Repatriation
Dubai offers complete flexibility in profit distribution. Companies may freely choose to distribute profits to shareholders or reinvest them without any obligation to retain earnings locally. Moreover, dividend distributions are not subject to additional taxes.
Passport and Visa Friendliness
Chinese citizens holding passports valid for more than six months can enter Dubai visa-free. Dubai also offers flexible and convenient visa policies, providing various options for Chinese nationals. It is equally easy to apply for residency visas for children, parents, and spouses.
Dubai’s Web3 Ecosystem
For Web3 entrepreneurs, Dubai’s thriving Web3 ecosystem—including its broad user base and pro-crypto regulatory stance—is a major draw for establishing operations locally.
Public Adoption in the UAE
According to Bitget Research’s Middle East report, in February 2024, several Middle Eastern countries saw daily active users (DAUs) on centralized exchanges ranging between 100,000 and 150,000. Notably, despite having populations roughly one-third the size of Saudi Arabia and Egypt, the UAE and Morocco achieved comparable DAU numbers. This indicates significantly higher adoption and usage rates of centralized crypto exchanges in the UAE and Morocco compared to their larger neighbors. Over the past year, UAE-based users increased by approximately 70%.
A study by financial services firm Holborn Assets reveals growing interest among UAE residents in using cryptocurrencies:
29% of respondents see crypto as a more convenient way to hold assets, 34% actively trade cryptocurrencies, and 22% use digital currencies for everyday payments. From an investment perspective, BTC and ETH are the most preferred. BTC is widely referred to as "digital gold" in the UAE, with 72% of crypto-investing users holding Bitcoin. In terms of on-chain behavior, UAE users are experienced in using DEXs for trading and lending and are generally comfortable with blockchain interactions.
Additionally, UAE users closely follow emerging trends in the crypto space, showing high interest in RWA, metaverse, AI, and cross-chain bridge projects.
Dubai’s Virtual Asset Regulation
The Dubai government has long offered comprehensive support to blockchain and Web3 industries through initiatives such as the Dubai Blockchain Strategy launched in 2016, the UAE Centre for the Fourth Industrial Revolution established in 2019 by the Dubai Future Foundation and the World Economic Forum, and the Dubai Metaverse Strategy unveiled in 2022—all laying a solid foundation for digital innovation.
In virtual asset regulation, Dubai has taken a pioneering role by establishing VARA (Virtual Assets Regulatory Authority), a dedicated independent regulator responsible for overseeing the offering, use, and exchange of virtual assets in Dubai. Industry insiders note that because VARA operates under market-oriented standards, its regulatory framework is clear and well-defined, its expertise is highly professional, and its approach is accessible—even allowing direct meetings with officials upon request.
So, how does one set up a Web3 company in Dubai? First, it’s essential to understand the types of business locations and corporate structures available.
Business Locations and Company Types in Dubai
When setting up a company in Dubai, the first decision involves choosing where to operate. In the UAE, commercial activities fall into two main categories—free zones and mainland—each differing in scope of operations, staffing, office requirements, and visa allocations.
Free Zones
-
Operational Scope: Free zone companies primarily focus on international business outside the UAE. Some designated free zones issue dual licenses, permitting both domestic and international operations.
-
Workforce Requirements: There is no mandatory requirement to hire UAE nationals.
-
Office Space: No physical office is required. If an office is leased, it must be located within the free zone.
-
Visas: Visa quotas are allocated based on company size. Additional visas can be requested by upgrading office space or applying directly, subject to approval by the free zone authority.
Mainland
-
Operational Scope: Mainland companies face no geographical limitations and can operate freely within and outside the UAE, governed by standard Dubai laws and regulations.
-
Workforce Requirements: At least 2% of skilled employees must be UAE nationals.
-
Office Space: A minimum physical workspace of 100 square feet is required, though there are no restrictions on location.
-
Visas: No cap on the number of visas, provided the business premises and activity comply with regulatory requirements.
Generally, non-UAE companies find free zones more suitable due to their flexibility. There are three main types of free zone entities:
-
Free Zone Limited Liability Company (FZ LLC): The most common structure, ideal for medium to large-sized businesses with multiple shareholders.
-
Free Zone Company (FZ Co.): Similar to FZ LLC, typically suited for businesses operating within specific free zones.
-
Free Zone Establishment (FZE): A single-member entity, perfect for entrepreneurs or small businesses seeking full control.
Different company types suit different needs, with varying registration requirements. Web3 founders should carefully select the appropriate structure based on their circumstances. Professional legal advice is recommended when in doubt. Once the company type and jurisdiction are chosen, the following steps outline the process of establishing a Dubai-based company.
Steps to Establish a Company in Dubai
Determine Business Activity
The first step is defining your business nature. Dubai offers over 2,100 eligible business activities categorized under industrial, commercial, professional, and tourism sectors.
Select a Free Zone
Dubai hosts over 30 free zones. It is often wise to choose one aligned with your industry to benefit from clustering effects.
Choose a Company Name
Ensure the proposed name complies with UAE naming conventions. Offensive language or religious insensitivity is prohibited. References to political groups or criminal organizations are banned. If naming the company after an individual, proof must be provided that the person is a partner or owner (abbreviations or initials are not allowed).
Apply for Preliminary Approval
The Department of Economic Development (DED) requires preliminary approval to confirm there are no objections to launching the business. Required documents vary by activity but typically include:
-
Business registration and licensing application form
-
Copy of passport or ID
-
Copy of residence permit / visa
-
Articles of Association
-
Project feasibility study
Open a Corporate Bank Account
Once approvals are granted and all documents are ready, you can proceed to open a corporate bank account.
Secure Office Space
All companies in Dubai must have a registered physical address.
Apply for Final Approval
Submit all finalized documents, including address and legal details, for final review.
With complete documentation and no official objections, the entire company registration process typically takes around one week.
ManQin Law Summary
Whether due to its traditional strengths in geography, taxation, and finance, or its progressive and supportive stance toward Web3, Dubai is rapidly emerging as one of the world’s leading hubs for crypto entrepreneurship. According to Social Capital Markets’ 2024 report “World’s Most Crypto Business-Friendly Countries,” Dubai ranks #1 globally—outperforming traditional favorites like Switzerland, Japan, South Korea, Singapore, and the United States.
OKX’s recent announcement of securing a full crypto exchange operating license further elevates Dubai’s status as a strategic node in global crypto commerce. We expect more prominent Web3 firms and startups to follow suit, with company formation serving as the crucial first step in this expansion.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
