Crypto is busy causing positive disruption in the Middle East, North Africa, and Türkiye (MENAT). The region led the way for digital asset adoption between July 2021 and June 2022, according to data from Chainalysis. The blockchain data platform's 2022 Geography of Cryptocurrency Report showed that users in the region received more than $566 billion in cryptocurrency value across the period — a 48% jump compared to the previous year. Although this figure dropped to an estimated $389.8 billion in on-chain value between July 2022 and June 2023, optimism remains high for crypto's continued emergence across the region.
Although MENAT currently sits behind other regions for the size of its crypto economy, the area's growth, ambition, and investment is attracting much attention as the sector looks ahead to more bullish sentiment in 2024 and beyond.
Recognizing the opportunity presented by MENAT, we launched OKX Tr in February 2024 — our class-leading crypto platform meticulously designed for the Turkish market. This next step in our global expansion and the localized features available to users spotlights the great potential of regions like MENAT when economic challenges and crypto-friendly policy combine.
So, what are the nations to keep an eye on in 2024? In this article, we'll look deeper into crypto and wider Web3 adoption among countries in MENAT, detailing — in no particular order — five top nations for crypto adoption in the region.
Türkiye
According to a report from HedgewithCrypto, Türkiye's crypto adoption rate has risen by 24% since 2020, while half of the population now owns crypto, according to another report. Much of this activity has come via centralized exchanges (CEX), with Türkiye ranking higher than the global average for CEX activity, according to Chainalysis.
What's driving Türkiye's crypto growth?
One of the main drivers of crypto adoption in Türkiye is the use of digital assets as a hedge against rising inflation. The country's inflation rate reached 64.8% in December 2023 — the highest point since November 2022 — up from 62% in November 2023 of the same year. As a precursor to rising inflation, the Turkish Lira weakened by 44% between 2021 and 2022 and plunged to record lows in mid-2023. This pushed many to move their funds into crypto as an alternative "safe haven" to more established destinations of the the US dollar, Euro, and gold.
Meanwhile, Türkiye has a relatively young population, with 12.95 million people — or 15.2% of the population — aged between 15-24. Although that figure is declining, it's well above the European Union's youth population percentage of 10.5%, as recorded in 2022. This demographic is helping to push up adoption, with the 18-30 age bracket being the second-most active group for crypto trading.
Opportunities and challenges ahead
A prolonged period of high inflation and low currency valuation could continue to fuel crypto's adoption in Türkiye, yet a growing appetite to bring about regulatory guidance provides another catalyst. New rules towards regulating the sector were announced in late 2021, with a focus on licensing and taxation. Improvements to digital security and custody services plus a requirement for Proof of Reserves could also reportedly be enforced. A stricter legal framework could help to ease concerns over volatility and fraud in the space, pushing more of the population towards crypto as a valid and long-term home for their funds.
However, perceptions of crypto and historical turbulence in the market might dampen enthusiasm among potential traders. In April 2021, Turkish crypto exchanges Thodex and Vebitcoin both collapsed suddenly within days of each other, inflicting significant losses on Turkish traders.
UAE
True to its enterprising spirit, the UAE has deliberately positioned itself among the leaders globally for crypto adoption through a supportive yet robust regulatory environment and a commitment to encourage the growth of Web3 technology. Most notably, the UAE government has made clear its plans to welcome businesses involved in developing new-generation technologies. That's all part of a bigger goal to diversify the nation's economy away from oil and towards more resilient sectors including technology and finance.
Abu Dhabi, one of the UAE's seven emirates and its capital, follows a regulatory framework set by the Financial Services Regulatory Authority of Abu Dhabi Global Market. Meanwhile, Dubai has established the Virtual Assets Regulatory Authority (VARA) to regulate and oversee digital assets in the emirate. We obtained our Virtual Asset Service Provider (VASP) license from VARA in January 2024, allowing us to offer virtual asset exchange services in Dubai.
What's driving the UAE's crypto growth?
At the time of writing, the UAE has the highest public crypto adoption rate globally, alongside Singapore. The UAE's crypto-friendly regulatory environment supports this status, and it's further boosted by a culture of innovation and early adoption. Many of the major global exchanges offer their services to UAE-based traders to smooth access to digital assets, while peer-to-peer trading and wider DeFi platforms are also readily available.
Regarding real-world adoption of Web3 technology, the UAE government has led from the front. In 2018, the UAE leadership launched the Emirates Blockchain Strategy 2021 that aimed to transfer 50% of government transactions onto the blockchain by 2021.
Opportunities and challenges ahead
Many would agree that the developing regulatory environment, and in particular, controls around anti-money laundering and know your customer, present the biggest opportunity for crypto's continued adoption in the UAE. With a desire to attract exchanges and Web3 companies into the nation, we can expect the UAE leadership to be flexible to the changing face of crypto. Doing so will help to continue attracting players in the sector and support traders with access to platforms and services.
One challenge is the complexity of the regulatory landscape in a country that's comprised of seven separate emirates, each with its own authority over the legalities of digital assets. Meanwhile, competition from other forward-looking neighbors including Saudi Arabia could draw crypto funds out of the country, particularly if the pool of local exchanges continues to grow regionally.
Morocco
Morocco ranked twentieth in Coinanalysis' 2023 Geography of Cryptocurrency Report, making the North African country the second-highest ranking of all MENAT nations. This is despite a ban on crypto trading in the country. Still, peer-to-peer trading has seen growing inflows, and now the Moroccan government is pursuing a path to formal regulation. In December 2022, Morocco's Central Bank, Bank Al-Maghrib, announced that a draft bill regulating the use of cryptocurrencies was ready.
What's driving Morocco's crypto growth?
Official comment around the regulation of crypto in Morocco has pointed to a desire not to stifle innovation as one motivation for pursuing a legal framework. That suggests many Moroccans recognize the value provided by crypto and wider Web3 technology as an alternative to conventional systems.
Although Morocco has witnessed rising inflation rates in recent years, it hasn't reached the levels seen in other regional states. In the ten years to 2022, inflation in Morocco averaged 1.7%, in contrast to a wider MENA average of 5.4%. Despite this relatively low inflation rate, volatility for the Moroccan Dirham, which is 40% pegged to the US dollar, could steer some people towards cryptocurrencies as a shelter for their cash during an economic downturn.
Opportunities and challenges ahead
One major opportunity for crypto to continue its emergence in Morocco is the large unbanked population. World Bank data from 2022 revealed that only 44% of Moroccan adults had a bank account. Although the reasons for this low rate of bank account access are varied and include religious factors, high fees, and geographical hurdles, an opportunity exists to capitalize on one of crypto's major use cases — financial inclusion. Should access to connectivity exist and education provided, Morocco's unbanked may choose crypto as their doorway to greater financial empowerment.
Greater adoption also relies on a cultural shift away from cash as a dominant form of payment. A study from Merchant Machine found Morocco to be the most cash-reliant country in the world. This suggests that the growth of any form of digitized financial system — whether traditional finance or crypto — requires a sizable shift in habits.
Egypt
Egypt's crypto story is an interesting one. In 2018, commercial transactions of Bitcoin were prohibited on religious grounds. By 2019, the Central Bank of Egypt (CBE) had announced a draft law banning the creation, trading, or promotion of cryptocurrencies without a license. Then, in 2020, Law No.194 was enforced to give the CBE extensive control over digital assets in the country, including mining and trading. Although the regulatory landscape is complicated, this timeline of key developments points to the steady acceptance of digital assets.
Today, there's much interest in Egypt's growing adoption of crypto, which places it at 35 in Chainalysis' 2023 Geography of Cryptocurrency Report.
What's driving Egypt's crypto growth?
In recent years, Egypt has been among the fastest-growing crypto markets in MENA for two main reasons. Firstly, inflationary pressure has weakened the Egyptian Pound. The currency was among the worst-performing in 2023, falling almost 20% against the US dollar between January and April. As a consequence, many people moved their savings into crypto as a way of preserving wealth while their cash holdings dropped in value.
Secondly, Egypt ranked sixth in the world for remittance payments received in 2023, with the market contributing significantly to the country's total GDP. Plans are in place to simplify the flow of payments into Egypt for citizens living and working outside the country, as many do. While traditional remittance houses are used by many, crypto now represents a significant catalyst for the nation's flourishing remittance market, allowing for faster, cost-effective transfer of funds.
Opportunities and challenges ahead
Could Egypt's recent economic strain lead the country towards crypto and Web3 technology as a means of finding efficiencies and spurring innovation? Although the nation has been cautious of crypto to date, the regulatory evolution seen over recent years hints at a change of position.
Already we've seen blockchain technology become a key enabler of the nation's logistics industry. In 2021, the Egyptian government announced the arrival of the Advance Cargo Information (ACI) system across the nation's ports. The system uses blockchain technology to digitize processes and simplify trade exports into the country, bringing a 55% improvement in customs processing times soon after launch.
Although the industry-wide adoption of blockchain technology is far removed from a reality where centralized and decentralized crypto exchanges are encouraged to grow and innovate freely, it does suggest that cryptography is continuing to emerge in Egypt.
Saudi Arabia
Few nations have experienced such rapid and high-profile evolution as the Kingdom of Saudi Arabia in recent years. The country's economic diversification has taken shape alongside various social and cultural changes as Saudi opens its doors to the world. However, from a legal and regulatory perspective, the brakes have remained on crypto trading. Banks are forbidden from processing virtual currency transactions, and although there's no formal regulatory framework in place, crypto traders can still access platforms and services.
Despite the gray area surrounding crypto trading, Saudi Arabia is embracing Web3 technology and positioning itself as a competitor to neighboring states. As the largest economy in the region, a serious future play from Saudi to embrace crypto could significantly shape the industry's direction in the Arab world.
What's driving Saudi Arabia's crypto growth?
For crypto trading, Saudi's large youth population can be considered an important driver of crypto adoption. Meanwhile, Chainalysis reports high interest from retail traders as individuals look to diversify their asset holdings, alongside growing involvement from institutional entities. This interest saw Saudi record the highest year-on-year (YoY) growth in crypto transactions among any country in the world between July 2021 and June 2022, when compared to July 2022 and June 2023, topping 12%.
Beyond crypto trading, the Kingdom's economic diversification is spurring the adoption of Web3 and wider crypto-related technologies. These actions align with the country's Vision 2030 plan to attract entrepreneurs and companies involved with new-generation technology onto Saudi's shores, bolstering its competitive strength.
Towards economic diversification, Project Aber is a joint initiative launched in 2019 between the Saudi Central Bank (SAMA) and Central Bank of the United Arab Emirates (CBUAE). Aber set out to explore the possibilities for domestic and cross-border settlement via a single regional currency using distributed ledge technology. Meanwhile, in October 2023, Saudi Arabia’s NEOM Investment Fund announced a partnership with Web3 games developer Animoca Brands to develop Web3 enterprise service capabilities. The capabilities will first be rolled out in Saudi Arabia and the NEOM region before being applied globally.
Opportunities and challenges ahead
Many would agree that the size of Saudi Arabia's ambitions presents the greatest opportunity for growing crypto adoption, particularly regarding trading. Could Saudi follow the UAE in pursuing a supportive regulatory environment for centralized and decentralized exchange services? With a population that's 63% youths (aged under 30 years) and Saudi being the largest economy in the Middle East, there's arguably a massive opportunity waiting to be unlocked.
However, government spending does appear to be slowing as the nation aims to reduce the size of its budget deficit following recent years of major investments. With crypto not appearing to be a priority at this moment, as shown by the lack of regulatory progress, opportunities for sector growth may be limited.
The final word
In many ways, the MENAT region is a microcosm for how crypto is emerging across the world. While nations like the UAE have forged ahead with formal regulations to support activities, Saudi Arabia has taken a more cautious approach. Yet despite these differences, trading activity is growing in both nations, with further adoption seeming almost inevitable.
Meanwhile, wider Web3 technologies do appear to be on the radar of most countries as the value available to industries becomes clear. That's led to various strategic investments across MENAT nations, which could open the door to further adoption.
Although hurdles to a region-wide embrace of crypto trading remain, the progress being seen today is cause for optimism.
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