4 Countries Lead Crypto and Blockchain Growth in MENA: UAE on Top
The MENA region’s cryptocurrency market saw about $338.7 billion in transactions between July 2023 and June 2024, making up 7.5% of global crypto activity, according to blockchain data platform Chainalysis. This makes the region the seventh-largest crypto market in the world. The UAE is leading the way in adopting cryptocurrency in the region, especially by creating supportive regulations.
Here’s an overview of crypto and blockchain efforts in four MENA countries.
UAE
In October 2024, the UAE’s Central Bank gave initial approval to AED Stablecoin LLC to create AE Coin, the first stablecoin tied to the UAE Dirham, following the bank’s rules. That same month, the UAE announced that some virtual asset services would not have to pay VAT, encouraging innovation and financial technology. This move strengthens the UAE’s role as a major hub for virtual asset investments.
Ranim Turfa, a market analyst at Axi, told *Forbes Middle East* that the UAE has become a leader in adopting new technologies, including cryptocurrencies and Web3. The country’s goal is to become a global hub for blockchain and Web3 businesses, attracting investment and talent.
Since launching the Dubai Blockchain Strategy in 2016 and the Emirates Blockchain Strategy 2021 in 2018, the UAE has worked hard to promote blockchain technology and digital assets across the nation.
The UAE is working to create strong rules for using cryptocurrencies, aiming to prevent illegal activities like money laundering and terrorism financing. In August 2024, Tether announced plans to launch a stablecoin tied to the UAE dirham in partnership with Phoenix Group. That same month, Ripple partnered with the DIFC Innovation Hub to support blockchain and cryptocurrency growth, helping startups adopt these technologies.
In September 2024, the UAE’s Securities and Commodities Authority (SCA) and Dubai’s Virtual Assets Regulatory Authority (VARA) signed an agreement to strengthen the UAE’s role as a global leader in virtual assets.
The UAE government is creating rules that encourage innovation while ensuring safety. The SCA manages virtual asset services, while the Central Bank of the UAE oversees payment tokens. Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) have their own systems for regulating virtual assets. VARA, the world’s first independent regulator for virtual assets (set up in March 2022), is key to managing and expanding this sector. In 2023, Rain Trading Limited received approval from ADGM’s regulatory authority to offer secure virtual asset brokerage and custody services.
Bahrain
Bahrain is making a name for itself in the crypto industry by creating special rules to attract fintech companies. In March 2023, the Central Bank of Bahrain (CBB) updated its rules for crypto assets after talking to experts in the field. These updates now cover “Digital Token Offerings” and require tokens with security-like features to follow CBB’s rules, depending on their purpose, structure, and rights. The new rules offer better protection for investors and allow approved companies to offer extra services with the CBB’s permission.
“Bahrain has been a leader among countries supporting cryptocurrency and is working to become an important player in the global crypto market,” says Turfa.
In 2019, Rain Management W.L.L, connected to Rain Trading Limited, became the first company in the Middle East to get a license for virtual asset services. The company is based in Bahrain and follows regulations set by its central bank. Back in September 2017, it was the first crypto platform to join the Central Bank of Bahrain’s regulatory sandbox, a program for testing new financial technologies.
Saudi Arabia
Saudi Arabia has been cautious about cryptocurrency, focusing more on blockchain technology. While the country doesn’t legally recognize cryptocurrencies, there are no laws that punish people for trading them, according to Turfa.
In 2018, a Saudi committee warned the public about the risks of virtual currencies, as they were not regulated in the country. However, in 2022, the Saudi Central Bank (SAMA) took a step forward by appointing Mohsen AlZahrani as the head of its Virtual Assets and CBDC program, signaling growing interest in crypto.
Turfa believes Saudi Arabia’s careful approach to digital currencies might change in the future, especially with its recent efforts in this area. In June 2024, the Saudi Central Bank (SAMA) joined the mBridge project, led by the Bank for International Settlements (BIS). This project, started in 2021 with central banks from Thailand, UAE, Hong Kong, and China, aims to simplify international payments using a shared digital currency platform based on blockchain technology.
Saudi Arabia has also been exploring digital currencies for some time. In January 2019, SAMA and the UAE Central Bank began working on a joint digital currency project to test and understand the idea of a central bank digital currency (CBDC).
According to Ahmad Assiri, a research strategist at Pepperstone, “Saudi Arabia is building its blockchain technology as part of Vision 2030, focusing on improving international payment systems. While the country is still cautious about cryptocurrencies, it sees blockchain as key to the future of finance.”
Qatar
Qatar has changed its approach to cryptocurrencies. In 2018, it warned against using bitcoin, but now it is building a framework to support digital currencies. In June 2024, the Qatar Central Bank (QCB) announced it had completed the infrastructure for its Central Bank Digital Currency (CBDC) project. This step shows Qatar is keeping up with global advancements in digital finance. After studying the subject, QCB decided to move forward by testing and developing applications for its CBDC.
QCB has identified three types of digital currencies:
- Central Bank Digital Currency (CBDC): Issued by the central bank, backed by cash reserves, and legally supported by the bank.
- Stablecoins: Issued by private companies.
- Cryptocurrencies: Digital assets not tied to a central bank.
In September 2024, the Qatar Financial Centre Authority (QFCA) and Qatar Financial Centre Regulatory Authority (QFCRA) introduced the QFC Digital Assets Framework 2024. This framework allows companies to apply for licenses to provide token-related services, offering clear rules for creating and regulating digital assets in Qatar.
In 2023, the Communications Regulatory Authority (CRA) introduced Qatar’s National Blockchain Blueprint. This plan, created with help from Hamad Bin Khalifa University (HBKU) and Qatar University (QU), aims to establish clear rules for blockchain and support the government’s strategy in this area.
Regarding crypto adoption in the region, Assiri says the four Gulf nations are ready to attract investments with careful planning, putting them in a strong position to lead the future of global digital finance. He adds, “As the market develops, cryptocurrencies will shift from being risky investments to becoming essential tools for financial systems worldwide.”
Published: 16th November 2024
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