Cryptocurrency adoption has been on the rise worldwide, and the Middle East and North Africa (MENA) region have emerged as key players in this digital revolution. In just one year, from 2021 to 2022, cryptocurrency transactions in MENA increased by a staggering 48%, now accounting for 9.2% of global cryptocurrency transactions, according to Chainalysis. But why is this region leading the charge, and what can we expect in Future?
Why is MENA Continuing to Lead in Cryptocurrency Adoption?
The driving force behind the cryptocurrency boom in MENA is multifaceted. First and foremost, the region boasts a youthful population, with nearly 55% of its residents under the age of 30. This tech-savvy demographic is inherently more open to embracing financial innovations like cryptocurrencies.
Moreover, many MENA countries are experiencing social and economic upheaval, marked by unequal income distribution and high youth unemployment rates. Faced with these challenges, the population is turning to alternative financial instruments, including cryptocurrencies, in search of economic empowerment.
Thirdly, there’s a growing awareness of blockchain and decentralized technology in MENA. Businesses and governments are recognizing the potential of blockchain to enhance transparency, reduce costs, and streamline processes. As they seek to gain a competitive edge over Western markets, blockchain is increasingly becoming a focal point for innovation in the region.
Which MENA Countries are Leading the Crypto Market in 2023?
According to Chainalysis’ 2022 Global Crypto Adoption Index, three MENA countries ranked among the top 30 regions by adoption rate: Turkey (12th), Morocco (14th), and Egypt (24th).
Turkey, in particular, has been witnessing a steady increase in cryptocurrency adoption. The Nation Alliance, a prominent political opposition party, has even incorporated crypto adoption as a key aspect of its 2023 election doctrine. A shift in political power in favor of this party could further propel the country’s booming cryptocurrency adoption.
Morocco is also making significant strides. The central bank, Bank Al-Maghrib, is actively working on a crypto law designed to protect individuals from trading risks. With regulatory support in place, Moroccans will be more confident in adopting cryptocurrencies.
Dubai deserves special mention as it transforms into a crypto hub. Startups and industry giants like Crypto.com are relocating their operations to Dubai to leverage its favorable tax policies and regulations. Local projects, such as Islamic Coin, are promoting financial inclusion within the Muslim population by offering Shariah-compliant financial tools built on blockchain technology.
What Factors are Driving the Industry’s Growth?
Projections for the global crypto market indicate a compound annual growth rate (CAGR) of 11.9% over the next seven years, taking the market value from its current $4.7 billion to $12.1 billion by 2030. As the MENA region exhibits more significant growth compared to other regions, it will play a pivotal role in driving this global surge.
Countries in the Gulf, particularly the UAE, have been enthusiastic about embracing cryptocurrency and blockchain. In the UAE, investors and business owners enjoy a 0% tax rate on cryptocurrency profits, making it an attractive destination for crypto entrepreneurs. This favorable environment has resulted in over 3,000 new crypto, blockchain, and digital asset startups registering in the country in the past year alone.
The DMCC free trade zone in the UAE is poised to further encourage startups and existing companies to relocate to the region. Gartner forecasts predict a minimum 3% growth in overall IT spending in 2023, signalling more investments in digital asset technologies like blockchain to address existing challenges.
The MENA region is set to maintain its leadership in the digital assets industry. As regulators embrace the concept of a fully digital and decentralized economy, more blockchain and crypto-based businesses are expected to gravitate towards the region. This will undoubtedly contribute to further growth in the MENA cryptocurrency market in 2023 and beyond.
In this dynamic landscape, the MENA region remains a focal point for innovation and adoption, driven by its youthful population, economic challenges, and the increasing recognition of blockchain’s potential. As we navigate the evolving crypto landscape, the Middle East and North Africa continue to illuminate the path forward.
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September 17, 2023