- Rising remittances, along with the devaluation of national currencies and inflation, have played a key role in the rapid growth of adoption.
- The countries showing the highest propensity for crypto adoption are Turkey, Egypt, and Morocco.
- In Persian Gulf countries such as Saudi Arabia and the United Arab Emirates, the volume of cryptocurrency trading has also grown substantially.
In the Middle East and North Africa (MENA) sub-region, cryptocurrency adoption has grown the fastest globally in the past year, according to the latest report from blockchain and market research firm Chainalysis.
Although MENA is one of the smaller digital asset trading markets, according to the Global Crypto Adoption Index 2022, it has seen breakneck growth over the period.
Between July 2021 and June 2022, residents of the subregion received $566 billion in cryptocurrencies, according to the report published on Thursday. The growth with respect to the previous year was 48%.
Three of the thirty countries with the highest crypto adoption worldwide are also located in MENA: Turkey (12), Egypt (14), and Morocco (24).
Savings and Remittances in Crypto
What explains this rapid growth of the cryptocurrency market in the sub-region is the increase in savings and remittances in crypto, along with more flexible regulations for trading crypto assets.
Two emblematic cases are Turkey and Egypt. The constant devaluations of their respective national currencies (Turkish lira and Egyptian pound), have led users to preserve their savings in cryptocurrencies to protect themselves from inflation and depreciation.
In the last year, the Turkish lira increased by 80.5%, while the Egyptian pound has weakened by 13.5%. Another determining factor has been the growth of remittances from Egypt this year.
The country is fifth worldwide in receiving remittances from other Arab countries and Europe. In addition, national income for this concept represents about 8% of GDP, highlights the report.
Crypto Remittance Corridor between Egypt and the UAE
On the other hand, the Egyptian central bank is developing a project to establish a cryptocurrency remittance corridor between Egypt and the United Arab Emirates. 4.23% of the total population of the UAE (10.08 million) is made up of Egyptian citizens.
According to data from Chainalysis, in Egypt, the volume of cryptocurrency transactions in the last year tripled compared to the period (July 2020 – June 2021). Turkey remains the largest cryptocurrency market in the region.
Turkish citizens received $192 billion in crypto between July 2021 and June 2022. However, the year-on-year growth of this market has been slower, according to the firm.
Another country where cryptocurrency trading has grown this year is Morocco. Contrary to Egypt and Turkey, this Arab country has managed to keep inflation at lower levels (5.3%).
There, the rapid adoption of cryptocurrencies seems to be more linked to permissive laws in this market. The Moroccan government and central bank this year changed their stance regarding crypto trading.
From the “sanctions and fines” promised to cryptocurrency traders in 2017, they went on to pass innovative regulatory and consumer protection laws, in accordance with the IMF and the World Bank.
On the Flipside
- The other Arab countries that make up the Gulf Cooperation Council (GCC) such as Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain, and Oman, also have important cryptocurrency markets.
This is the case of Saudi Arabia, the third cryptocurrency market in the MENA subregion, while the UAE is the fifth. Dubai, the most populous city in the UAE, is currently a major hub for the world’s leading crypto exchanges, from which the rest of the Asian and African markets are served, apart from those in the Middle East.
Why You Should Care
- The profile of Arab users from the GCC countries that have boosted cryptocurrency trading in MENA are young and wealthy and looking for new investment options, explains Akos Erzse, Senior Manager of Public Policy at BitOasis exchange.
He adds that the adoption of cryptocurrencies as trading and savings assets is not only by retail merchants but by the banking institutions themselves that are establishing alliances with DeFi companies.