MENA Region’s Increasing Adoption of Cryptocurrency
The Middle East and North Africa (MENA) region is embracing cryptocurrency for various reasons. In countries with unstable currencies or high inflation rates, people are using cryptocurrency as a way to safeguard their wealth. On the other hand, individuals in economically stable countries like the UAE are more interested in exploring innovative and investment-oriented applications of cryptocurrencies.
A recent report by Chainalysis, a blockchain firm, reveals that the MENA region is ranked as the sixth-largest crypto economy globally. From July 2022 to June 2023, the region received approximately $389.8 billion in on-chain value, accounting for 7.2% of the global transaction volume during that period. Turkey, Morocco, and Iran secured positions within the top 30 countries in terms of crypto activity.
DeFi Adoption in UAE
According to Chainalysis, the UAE stands out in the MENA region for its high share of crypto activity happening on decentralized finance (DeFi) protocols, second only to Israel. The UAE has become a global crypto hub by implementing innovation-friendly regulatory frameworks that encourage innovation while ensuring consumer protection. These regulations have attracted many cryptocurrency entrepreneurs and enthusiasts to the country, possibly explaining the increased usage of DeFi.
The introduction of VARA, a comprehensive regulatory framework released in February 2023, has significantly boosted the UAE’s crypto ecosystem. Akos Erzse from BitOasis stated that VARA sets itself apart by being responsive to industry needs and providing clear rules for different services.
Turkey and Saudi Arabia Catching Up
Turkey ranks fourth globally in terms of raw cryptocurrency transaction volume, with approximately $170 billion flowing into the country over the past year. This positions Turkey just behind the United States, India, and the United Kingdom in terms of transaction volume. Turkish users seem to be turning to cryptocurrency as a hedge against currency devaluation and a way to protect their savings.
The Chainalysis report also highlights that USDT is the most commonly acquired asset using the Turkish lira on global exchanges. Despite the overall decline in NFT activity, Turkey leads the region in web traffic to NFT platforms.
In Saudi Arabia, retail investors are driving the growth of cryptocurrency adoption. They see cryptocurrencies as a means to diversify their investment portfolios. Abdulmajed Alhamzah from Rain Exchange attributes this trend to retail investors’ interest in cryptocurrencies.
Hot Take: UAE Takes the Lead in DeFi Adoption
According to a Chainalysis report, the UAE is leading the MENA region in DeFi adoption. The country’s crypto ecosystem has flourished due to its innovative regulatory framework and consumer protection measures. With a higher share of crypto activity on DeFi protocols compared to its regional neighbors, the UAE has become a global crypto hub. The introduction of VARA, a comprehensive regulatory framework, has attracted numerous crypto players to the UAE. This forward-looking regulatory clarity has propelled the country’s DeFi usage and solidified its position as a leader in the MENA crypto market.
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