The Middle East and North Africa (MENA) region has the sixth-largest crypto economy of any region examined by Chainalysis. As per the 2023 edition of their Geography of Cryptocurrency report, the MENA accounted for about $389.8 billion of on-chain value received between July 2022 and June 2023.
Interestingly though, Chainalysis observes that there are significant differences in crypto adoption and usage between the countries within MENA.
For instance, Saudi Arabia leads the world in terms of year-on-year (YoY) growth in crypto transaction volume. In fact, the kingdom is one of only six countries that sees any YoY transaction volume growth during the observed period.
Experts Chainalysis spoke to credit this increase primarily to retail investors. They are the ones who turn to crypto in order to diversify their investment portfolios.
Looking for safe haven
When it comes to ranking the MENA countries by crypto values received, it is Turkey that leads the way. In fact, the value of transactions in Turkey is several times higher than second placed UAE, and third placed Saudi Arabia.
In terms of absolute figures, Turkey received about $170 billion over the last year. This actually puts the country at fourth place worldwide, only behind the US, India, and the UK.
In a webinar discussing the major adoption themes in the report, Chainalysis’ Cybercrimes Research Lead Eric Jardine, points out that cryptos are often seen as safe havens from unstable local currencies. And Turkey is a shining example of this trend.
The report shares insights from Yasin Oral, CEO and founder of Turkish cryptocurrency exchange Paribu. Oral notes that the country’s recent macroeconomic climate is one of the reasons for its relatively high level of crypto adoption.
He argues that the tightening monetary policies around the world had an adverse impact on Turkey. This forced individuals to seek alternatives, like cryptos to store value.
Building on this, Jardine points to a strong correlation between the use of the Turkey Lira to purchase the stablecoin USDT across global exchanges.
The impact of regulations
Also present on the webinar was Caroline Malcolm, VP Global Public Policy at Chainalysis. She talked about regulation and how it influences adoption patterns.
Pointing to countries like India, and US, which don’t have “comprehensive” crypto policies, Malcolm observes that the “grassroot adoption” isn’t waiting for regulators to come online. She explains comprehensive policies as those that go beyond anti-money laundering, and sanctions, and cover things like consumer protection rules, capital reserve requirements, market conduct rules, and such.
But what happens when governments do start to make policy choices, asked Malcolm: “How does that impact adoption?”
To explain, she specifically talked about the UAE and the active role its government has played over the last year in regulating this space. According to their data, moves such as the creation of VARA led to a huge number of businesses moving into the crypto space in the emirates.
The data also points to much of the crypto activity in the UAE taking place on decentralized finance (DeFi) protocols. This she believes reflects the maturity of the emirates’ crypto market.
“This is something we’ve seen across the board for a number of years now,” says Malcolm. “The more advanced economies, the more mature crypto markets where we’ve seen adoption for a lot longer, tend to have slightly more DeFi activity. That’s now playing out in the UAE, as the overall ecosystem in that country has grown as well.”
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