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Cryptos are gaining strength in the MENA region. Will a safer ecosystem be needed?

The odd trading exchange might go pop, but the most popular digital tokens survived in the region. But regulators must impose a few rules in crypto’s wild west

Cryptos are gaining strength in the MENA region. Will a safer ecosystem be needed?
[Source photo: Pankaj Kirdatt/Fast Company Middle East]

Last year was dramatic and trying for the crypto faithful. Bitcoin collapsed, and crypto-crime skyrocketed. But despite turbulence in the markets – the collapse of Celsius, Voyager, and FTX and the toll it’s taken on investors – crypto activity in the Middle East and North Africa (MENA) is on the rise, and the digital asset industry is pulling through.

The region now accounts for an impressive 9.2% of global cryptocurrency transactions, according to a Chainalysis survey, making it the fastest-growing region in the world.

Touted as the future of finance, 2023 will be critical for crypto in the region as a larger movement is happening. Cryptocurrency, and the blockchain that underpins it, are evolving as a powerful, decentralized alternative to the money and banking system.

“Crypto represents a significant advancement in financial technology. Just as the internet revolutionized communication, cryptocurrency is poised to revolutionize financial services,” says Talal Tabbaa, Founder and CEO of CoinMENA. 

The odd trading exchange might go pop, but the most popular digital tokens survived in the region. And, when regulators impose a few rules in crypto’s wild west, its respectability will strengthen.

So while companies and investors are bracing for more scrutiny and regulations, drivers of adoption appear to vary in the region. In Egypt, which is now the MENA region’s fastest-growing crypto market, digital currencies are used as a means of savings. “The weakening of the Egyptian pound makes cryptocurrencies an attractive means of protection against currency devaluation,” says Michael Gronager, co-founder and CEO of Chainalysis.

Also significant in the country is the use of cryptocurrency for remittances — Egypt’s national bank has started to build a crypto-based remittance corridor between Egypt and the UAE, where many Egyptian natives work.

On the other hand, adoption in the UAE is driven by the country’s ambitions to position itself as a global crypto hub. “Government support, forward-focused regulations, mechanisms for consumer protection, and support for the establishment of crypto businesses are all driving the adoption of cryptocurrencies and Web3 technologies in the country,” adds Gronager.

Samir Satchu, SVP of Public Policy at BitOasis, says crypto adoption in the MENA region is based on a number of drivers. “It includes enabling regulatory frameworks such as those in Dubai, Bahrain, and the ADGM to further trust and consumer protection, and in turn boost adoption. Second is the GCC’s significant base of earlier adopters investing through digital channels. And third, in markets characterized by high inflation and local currency devaluation, adoption will continue to be driven by a need to protect savings from rapid devaluation with a focus on USD-denominated stablecoins.”


At the World Economic Forum annual meeting last month, Dr. Thani Al Zeyoudi, UAE’s minister of state for foreign trade, said the cryptocurrency would play “a major role for UAE trade going forward” as the country continues to attract crypto companies to the country.

Last year, Dubai Multi Commodities Center attracted more than 500 crypto startups and about 3000 registered businesses. The UAE cabinet recently introduced a new regulation and an independent regulatory authority – The Dubai Virtual Asset Regulation Law and the Dubai Virtual Assets Regulatory Authority – to oversee the growth of the virtual asset business environment, including regulation, governance, and licensing.

“Today, Dubai has become a hub for crypto companies serving customers across Asia and Africa, not just in the Middle East. The government support also means, unlike other countries, adoption in the UAE is driven by both the retail and consumer segment and the business ecosystem, with banks and financial institutions also demonstrating interest and innovation in the space,” says Gronager.

In neighboring Saudi Arabia, although the government has not yet made any official legislation on crypto assets, with officials raising concerns about their speculative nature, it seems to have adopted a positive attitude toward digital assets and blockchain technology. Last September, the Saudi Central Bank appointed Mohsen AlZahrani to lead its virtual assets and central bank digital currency program.

Meantime, the Saudi government has been collaborating for several years with the UAE on a potential joint digital currency. In the kingdom, millennials and Gen Zers are investing in cryptocurrency. A recent survey revealed that 3 million Saudis, 14% of adults between 18 and 60, were either current owners of crypto assets or had traded them. 

There’s no doubt with crypto and blockchain, businesses across industries are reinventing their functions, facilitating secure, transparent, and traceable transactions across the market, but experts say it is important to separate the overhyped speculative activity of the crypto market from the fundamentals of what crypto and blockchain will bring to society over time.

“Let’s take Bitcoin, for example. For the first time in history, we have a neutral, global monetary network that does not require a trusted third party to function. Many people realize how revolutionary this concept is,” says Tabbaa.

Another good example is Ethereum, which completed a monumental engineering project of shifting the network from the Proof of Work to the Proof of Stake consensus mechanism last September. “Ethereum is the base layer for most DeFi applications, smart contracts, and NFTs.” 


As with any new technology, crypto has attracted criminals and fraudsters. Bitcoin, the software built on computers and networks, added anonymous payments, which made it easy for criminals to secretly pay and accept money to ratchet up existing crimes and invent new ones. But Gronager says they are not representative of the industry. “The overall share of illicit cryptocurrency activity remains encouragingly small — just 0.24% of the total cryptocurrency transaction volume.”

“There’s always been financial crime and fraud in financial services,” says Tabbaa. For example, fines paid by the biggest banks in the world since the year 2000 have now reached $343 billion. FTX and other crypto collapses were failures of centralized entities that required trust to operate, not a failure of crypto. In fact, Bitcoin, Ethereum, and DeFi smart contracts functioned perfectly as intended throughout these high-profile collapses.” 

All agree that the industry needs regulation to prevent bad actors like FTX from taking advantage of regulatory arbitrage, and as the ecosystem matures, more discussions will be focused on consumer protection, including through custody, disclosure, and market structure regulations. 

“Events such as FTX’s downfall are usually accelerants for such policymaking, where renewed efforts are initially focused on low-hanging fruit — strategic and effective action that can be implemented quickly and make an important difference in the short-to-medium term,” says Gronager. 

Striking the appropriate balance between consumer protection and innovation will require close collaboration between the industry and policymakers across jurisdictions. 


Experts say the collapse of FTX last December, once a $32 billion crypto exchange, will reshape the industry. “FTX reminded us of the most fundamental crypto ethos: Don’t trust, verify,” says Tabbaa.

FTX’s failure should remind crypto companies of, adds Tabbaa, the importance of risk management. “Many crypto firms launched during the bull market, where risk management is sacrificed for growth. Effective risk management is critical for crypto firms to navigate the ups and downs. In particular, counterparty risk needs to be taken much more seriously.”

Gronager says it is important to distinguish improprieties and the broader crypto industry, including the technology on which it is built. “People operate all industries. People make decisions on behalf of companies. And every industry has companies that abuse, fail, and defraud. Whatever happened at FTX, it was not a crypto or blockchain-specific failure. It was, as many failures are, human.”

What is required, therefore, is not an overhaul of the infrastructure and platforms that power the crypto world. Instead, this is an opportunity to advocate for and coordinate the industry’s efforts toward a better, safer ecosystem.

In the wake of recent developments, all agree that it is prime time for the cryptocurrency industry to harness blockchain’s inherent transparency to build an economic system that holds itself to a higher standard than traditional finance. “No other sector of the crypto ecosystem embodies transparency more than DeFi, where all transactions are visible, and the code behind protocols is in the open for all to see. The entire crypto industry should strive for this level of transparency. And when more value moves onto the blockchain, potential risks will be more transparent,” says Gronager.

But will the future of crypto continue to fluctuate, playing with the emotions of an already stressed investor community? “Crypto is still a small industry, with less than 4% global market penetration, and is worth less than a $1 trillion market cap. Volatility will decrease over time as adoption grows and prices stabilize,” says Tabbaa. 

Analysts are unconvinced the latest downturn in digital currency is indicative of crypto winter. To compete more effectively, it needs to achieve more widespread adoption. 

Gronager says tokenizing real-world assets is the crypto industry’s future. “Stablecoins have already done this for cash, and it isn’t hard to imagine that automobiles, houses, securities, and more will follow suit.” 

While there has been a significant negative global impact in adoption driven by lower asset pricing and market failures, Satchu says, “We hold a strong conviction in the future of crypto, blockchain, and Web3 across the GCC and MENA.”

“Adoption is ultimately driven by utility, and we believe that 2023 will be a year when the industry must focus more on enabling regionally relevant use cases, protecting consumers against further failures, rather than on the speculative opportunity,” he adds.

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Suparna Dutt D’Cunha is the Editor at Fast Company Middle East. She is interested in ideas and culture and cover stories ranging from films and food to startups and technology. She was a Forbes Asia contributor and previously worked at Gulf News and Times Of India. More

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