MENA (Middle East and North Africa) region has been increasingly adopting cryptocurrency for various reasons. In countries with unstable currencies or high inflation rates, cryptocurrency serves as a means to protect wealth.
Contrastingly, individuals in economically stable countries such as the UAE are more inclined to explore innovative and investment-oriented applications of cryptocurrencies.
A recent Chainalysis report delves into why MENA ranks as the sixth-largest crypto economy among the regions analyzed by the blockchain firm this year. The study, which covered the period from July 2022 to June 2023, estimated that the MENA region received approximately $389.8 billion in on-chain value during this time frame. This figure accounts for nearly 7.2% of the global transaction volume recorded throughout the study period.
The MENA region boasts the presence of three countries that secured positions within the top 30 in this year’s index: Turkey (12th), Morocco (20th), and Iran (28th).
DeFi Adoption in UAE
In a press release shared with CryptoPotato, Chainalysis revealed that UAE is the biggest standout in the MENA region, with a much higher share of crypto activity taking place on decentralized finance (DeFi) protocols compared to its regional neighbors, apart from Israel.
The UAE has transformed itself into a world crypto hub by passing innovation-friendly regulatory frameworks that foster innovation while maintaining consumer protection. These regulatory measures have attracted numerous cryptocurrency entrepreneurs and enthusiasts to the region, potentially explaining the increased DeFi usage.
The comprehensive regulatory framework VARA released in February 2023 has provided a major boost to the country’s crypto ecosystem. Akos Erzse, a Senior Manager for Public Policy at Dubai-based crypto platform BitOasis, highlighted that one of the main factors that set VARA apart is that it is designed “to ensure the rules are responsive to industry needs.”
While speaking to Chainalysis, the exec stated,
“VARA has brought new momentum for forward-looking regulatory clarity in the region, which has attracted a high number of crypto players to the UAE. There are distinct rulebooks for staking, broker-dealers, advisory services, custodians – this makes it easier for businesses to understand what the specific regulatory requirements are for providing certain services.”
Turkey, Saudi Arabia Not Far Behind
Turkey also ranks fourth globally in terms of raw cryptocurrency transaction volume, with an influx of approximately $170 billion over the past year.
This positions Turkey just behind the United States, India, and the United Kingdom in transaction volume.
While the UAE’s cryptocurrency economy seems to be primarily driven by innovation and a desire for diversified investments, Turkish users appear to be turning to cryptocurrency as a hedge against currency devaluation and a means to safeguard their savings.
The report also reveals that USDT is the most commonly acquired asset using the Turkish lira on global exchanges. Additionally, despite the overall decrease in NFT activity since mid-2022, Turkey leads the region in terms of web traffic to NFT platforms.
Abdulmajed Alhamzah, the Country General Manager for Saudi Arabia at the cryptocurrency exchange Rain, attributes this growth to retail investors, who constitute a substantial demographic embracing cryptocurrencies as a means to diversify their investment portfolios.
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