67 percent of UAE crypto transactions driven via institutional investment

Regulatory clarity boosts market maturity, says a Chainalysis report
67 percent of UAE crypto transactions driven via institutional investment
UAE crypto

Chainalysis, the blockchain data platform, today unveiled the Middle East and North Africa (MENA) findings of its 4th annual Geography of Cryptocurrency Report, providing comprehensive insight into the actual state of crypto markets and cryptocurrency utilization across the world. This report revealed that between July 2022 and June 2023, the majority (67 percent) of cryptocurrency transactions in the UAE were for institutional investments (values over $1 million), followed by transfers for professional investments ($10,000 to $1 million). Retail investments (up to $10,000) accounted for just 4.63 percent of transfers in the Emirates.

“The fact that by far the larger portion of crypto investments in the UAE is for institutional and professional-sized transactions, indicates an eagerness from organizations and high-net-worth individuals to add cryptocurrency to their investment portfolios. This market confidence is validation of the efforts being made by the country’s leadership to offer commendable regulatory clarity, and establish the nation as a global crypto hub,” said Kim Grauer, Director of Research at Chainalysis.

Moreover, across the MENA region, the UAE was one of the only countries to see a higher share of crypto activity taking place on decentralized exchanges (48 percent), rather than on centralized exchanges (46 percent). The outsized popularity of DeFi — which represents the cutting edge of blockchain technology in many ways — in the UAE, further validates the success the country has had in passing innovation-friendly regulatory frameworks that allow groundbreaking crypto platforms to develop with oversight that keeps consumers safe.

Read: Can cryptos trigger macroeconomic and financial stability risks?

The report by Chainalysis also combined on-chain data and real-world data to measure which countries are leading the world in grassroots crypto adoption. This year, the researchers found that India, the Philippines, and Pakistan all ranked among the top ten — at positions one, six and eight respectively — of their Global Crypto Adoption Index. “This bodes especially well for the UAE where these nationalities represent a significant portion of the expat population. The surging popularity among people of these nations is likely to correlate with increased crypto adoption in the UAE as well,” said Grauer.

While the hype around NFTs (Non-Fungible Tokens) peaked in early 2022 and has since sharply declined, the number of web traffic visits to NFT sites in the UAE was impressively high, exceeding 4 million from July 2022 to June 2023. “This retained interest in NFTs in the UAE offers businesses the opportunity to grow past the hype and start to introduce practical use cases based on this technology. NFTs have the potential to enhance consumer experiences in the UAE through their application in a diverse range of purposes, including title deeds, music festival ticket sales, charity donations, and analyzing gaming trends,” said Grauer.

Over the research period, Chainalysis found that the crypto value received by the UAE was over $34.9 billion. While this represents a 17 percent decrease over the previous year, the country’s crypto market fared much better than many other nations in the region including Qatar (26 percent decline), Oman (49 percent decline), Jordan (55 percent decline), and Lebanon (96 percent decline). Interestingly, in Saudi Arabia — despite the ‘quasi-legal’ status of cryptocurrencies — the crypto economy grew more this past year than any other country, with a year-over-year transaction volume growth of 12 percent. In fact, Saudi Arabia was one of just six countries to see any year-over-year transaction volume growth during the time period studied.

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