The financial landscape in the Middle East and North Africa (MENA) region is undergoing a profound transformation as the adoption of cryptocurrencies explodes.
The Middle East and North Africa (MENA) region is a new hotbed of cryptocurrency adoption. Remarkably, the region now ranks seventh globally, capturing $338.7 billion in on-chain value from July 2023 to June 2024, according to Chainalysis. This represents 7.5% of global trading volume, firmly positioning the MENA region as a central force in the digital assets space.
Source: Channel Analysis
Turkey and Morocco at the front
Turkey and Morocco are at the forefront of this change. Positioned 11th and 27th in the Global Crypto Adoption Index, these countries are key contributors to the market expansion. Turkey processed an impressive $137 billion in cryptocurrency transactions, while Morocco processed transactions worth $12.7 billion.
Driven primarily by institutional and professional transactions, 93% of which are valued at $10,000 or more, the MENA crypto market reflects growing trust among major players. This trend not only highlights the growing activity in the region, but also suggests a potential increase in institutional involvement in the future.
Source: Channel Analysis
Saudi Arabia and UAE Drive DeFi Growth
Although centralized exchanges (CEX) remain the primary gateway for cryptocurrency flows in the Middle East and North Africa (MENA), decentralized platforms and DeFi applications are growing rapidly. This trend is particularly strong in Saudi Arabia and the United Arab Emirates (UAE), where interest in decentralized solutions has increased.
Source: Channel Analysis
Saudi Arabia, a G20 country with more than 30 million inhabitants, can boast of having a young population: around 63% are under 30 years old. This younger population is more willing to experiment with new financial technologies, boosting the country’s above-average participation in DeFi activities.
At the same time, the UAE has established a progressive regulatory framework that clarifies specific aspects of crypto participation. This forward-thinking approach has attracted a diverse user base and strengthened the UAE’s position as a hub for broader DeFi and crypto projects.
In contrast, users in Türkiye and Qatar rely heavily on CEXs, with DeFi engagement lower than global averages. However, Qatar’s recent decision to allow companies to apply for licenses as token service providers could soon transform this landscape.
Stablecoins and Altcoins gain market share
In the MENA region, there is a notable shift in asset preferences. Stablecoins and altcoins are steadily gaining market share against traditionally favored assets like Bitcoin (BTC) and Ether. This trend is particularly pronounced in Türkiye, Saudi Arabia and the United Arab Emirates, where stablecoin volumes are significantly higher than the global average.
Source: Channel Analysis
In Turkey, a country with a history of economic instability and high inflation, the reliance on stablecoins reflects retail users’ concerns about volatility and their need for consistent stores of value. Conversely, in the UAE, where the local currency is pegged to the US dollar, the growing adoption of stablecoins likely indicates their popularity as an on-ramp to broader crypto services and exchanges.
Ether (ETH) usage in the region remains relatively constant but remains below the global average, with Turkey leading in terms of engagement. Meanwhile, Israel and Saudi Arabia demonstrate strong interest in altcoins, well above the global average, perhaps reflecting a higher risk appetite and interest in a wider variety of assets at beyond the main cryptocurrencies.
UAE becomes MENA region’s crypto powerhouse
The UAE continues to experience rapid growth in crypto, driven by a combination of regulatory innovation, institutional interest and expanding market activity. Between July 2023 and June 2024, the UAE received over $30 billion in crypto, ranking the country among the top 40 in the world and securing its position as the third largest crypto economy in the MENA region.
Source: Channel Analysis
Unlike most countries around the world, UAE crypto activity is growing across all transaction size brackets, signaling a more balanced and comprehensive adoption landscape. The country also has a diverse crypto ecosystem, with significant activity beyond CEXs, including DeFi.
The total value received by DeFi services, including decentralized exchanges (DEX), increased by 74% compared to the previous year. DEXs alone grew by a staggering 87%, from an estimated $6 billion to $11.3 billion.
Arushi Goel, head of policy for Middle East and Africa at Chainalysis, said traditional financial institutions such as banks are actively exploring their role within the crypto ecosystem, demonstrating the growth of a crypto nexus -TradFi. A robust and evolving regulatory framework also supports this commitment.
The UAE’s regulatory landscape is at the forefront of global efforts to balance innovation and necessary protection. Various UAE regulatory authorities are developing tailor-made approaches to overseeing the booming crypto sector.
Dubai’s Virtual Assets Regulatory Authority (VARA) plays a critical role in this regulatory expansion. Established in 2022 as the world’s first autonomous regulator for virtual assets, VARA not only shapes the local market but also attracts global attention.
