Why the Middle East is Critical to the Future of Crypto:
The Middle East has received global attention from crypto enthusiasts in recent years. This is due to numerous reasons. First, the Middle East has emerged as a significant player in the global cryptocurrency space with countries like Bahrain and the United Arab Emirates enacting laws directed at increasing crypto adoption in the region. Interestingly, the UAE recently recorded a 400% increase in the number of registered crypto businesses within the span of two years (2020 to 2022). Essentially, while the past few months have been particularly rocky in the crypto ecosystem, the Middle East could be the source of crypto’s resurgence.
Crypto Adoption in the Middle East
The Middle East is currently at the forefront of crypto adoption. According to the latest Geography of Cryptocurrency Report by Chainalysis, users based in the Middle East received about $566 billion in crypto between July 2021 and June 2022. This accounts for a 48% increase from the numbers recorded in the previous years.
According to the report, this surge in crypto adoption is primarily due to increased remittances and the quest for savings preservation. Also, some Middle Eastern countries like the UAE have intentionally implemented policies favorable to the crypto ecosystem. In countries like Turkey, the rise of inflation and persistent currency depreciations have increased crypto’s appeal for many users. These users perceive crypto as a viable alternative that will likely maintain their savings as a store of value.
Also, Egypt’s currency has reportedly weakened by about 13.5 percent in the past year. Regardless, the country’s government has initiated plans to launch a crypto-based remittance corridor between Egypt and the UAE. The launch of this corridor is primarily due to the presence of many Egyptian workers in the UAE. Thus, given the surge of crypto adoption in the UAE, UAE-Egypt remittance inflows will be more seamless.
The Middle East as the Future of Crypto
The MENA region has established itself as a primary emerging market. Many countries in the region have been releasing crypto-focused policies and initiatives. For instance, crypto giant Binance recently launched services in Dubai and Bahrain. The UAE Securities Regulator has also announced that it is accepting licensing applications from crypto businesses. This mandatory licensing regime covers all companies seeking to provide crypto-related services in the country unless such companies are already licensed in financial-free zones in the UAE.
From all indications, major Middle Eastern countries are bullish about the crypto wave. The Saudi Arabian Central Bank also recently announced plans to launch a digital currency similar to cryptocurrency. Experts have speculated that Saudi Arabia’s CBDC will likely drive crypto adoption in the kingdom.
The Middle East is undoubtedly at the forefront of the current global crypto drive. As crypto adoption continues to rise in the region, more crypto companies will likely launch operations in the area. This situation is a call to action for many Middle Eastern countries to leverage the region’s new-found attention to attract foreign direct investment to their territories.