Growing Interest and Adoption of Cryptocurrencies in MENA

By: Monika Molnarova, PR Manager

Cryptocurrencies have seen a remarkable surge in popularity in the MENA region in recent years. This trend is driven by several factors, including the region’s large unbanked population, economic volatility, and a desire for financial independence. According to a report by Chainalysis, the MENA region is one of the fastest-growing cryptocurrency markets in the world, with a significant increase in the volume of cryptocurrency transactions, particularly in countries like the United Arab Emirates (UAE), Saudi Arabia, and Egypt.

In the UAE, for example, the government has been proactive in embracing blockchain technology and cryptocurrencies. Dubai’s ambition to become a global hub for blockchain has led to a favorable environment for crypto businesses. The launch of the Dubai Blockchain Strategy in 2016 and the subsequent development of the Dubai Blockchain Center are clear indicators of the city’s commitment to integrating blockchain into various sectors of the economy. As a result, cryptocurrency adoption in the UAE has accelerated, with both retail and institutional investors increasingly participating in the market.

Similarly, in Saudi Arabia, the government’s Vision 2030 initiative, which aims to diversify the economy away from oil, has opened up new avenues for digital innovation, including cryptocurrencies. The Saudi Arabian Monetary Authority (SAMA) has been exploring the potential of blockchain technology for cross-border payments, and there is a growing interest in cryptocurrencies among the younger population.

Egypt, with its large population and significant remittance flows, is also witnessing a rise in cryptocurrency adoption. The Egyptian pound’s depreciation and inflation have led many to seek alternative ways to store and transfer value, making cryptocurrencies an attractive option. Despite the Central Bank of Egypt’s cautious stance on cryptocurrencies, there is a thriving underground crypto economy in the country.

THE REGULATORY ENVIRONMENT FOR CRYPTOCURRENCIES IN MENA

The regulatory landscape for cryptocurrencies in the MENA region is diverse, with each country adopting its own approach. While some countries have embraced cryptocurrencies and are actively working on regulatory frameworks, others have taken a more cautious or restrictive stance.

In the UAE, the regulatory environment for cryptocurrencies is relatively favorable. The country has established several free zones, such as the Dubai Multi Commodities Centre (DMCC) and the Abu Dhabi Global Market (ADGM), which provide a regulatory framework for crypto businesses. The UAE’s Securities and Commodities Authority (SCA) has also issued guidelines for the issuance, trading, and listing of crypto assets, providing much-needed clarity for market participants.

However, not all MENA countries have been as welcoming to cryptocurrencies. In Saudi Arabia, for instance, while there is interest in blockchain technology, the government has been more cautious in its approach to cryptocurrencies. The Saudi Arabian Monetary Authority (SAMA) has issued warnings against trading in cryptocurrencies, citing concerns about fraud and money laundering. Despite these warnings, there is still a growing interest in cryptocurrencies among the population, particularly among the younger generation.

In contrast, countries like Egypt have taken a more restrictive approach. The Central Bank of Egypt has banned the use of cryptocurrencies, citing concerns about their potential use in illegal activities. However, despite the official stance, there is still a growing underground crypto economy in the country, driven by the need for alternative financial solutions.

Overall, the regulatory environment for cryptocurrencies in the MENA region is still evolving. While some countries have made significant progress in developing clear regulatory frameworks, others are still grappling with how to balance the potential benefits of cryptocurrencies with the risks they pose. As the market continues to grow, it is likely that more countries in the region will develop regulations to govern the use of cryptocurrencies, providing greater clarity and security for investors.

STRATEGIC PARTNERSHIPS DRIVING CRYPTO ADOPTION

Amidst this evolving regulatory landscape, strategic partnerships play a crucial role in driving cryptocurrency adoption and promoting financial inclusion in the MENA region. One of the key drivers of cryptocurrency adoption in the MENA region is the need for financial inclusion. According to the World Bank, a significant portion of the population in the MENA region is unbanked, with limited access to traditional financial services. Cryptocurrencies offer an alternative means of accessing financial services, particularly for those who are excluded from the traditional banking system.

Maskex, Dubai- based cryptocurrency exchange platform, has been actively forging partnerships with local financial institutions, payment gateways, and technology providers to expand the reach of cryptocurrencies in the region. By working with established players in the financial sector, it is able to offer a range of services that cater to the needs of both retail and institutional investors.