Crypto Seen as Investment Opportunity in MENA Region Says Iceberg Capital Executive Chairman – Interview Bitcoin News
While interest in digital assets has waned in some parts of the world, crypto adoption in the Middle East and North Africa has been soaring, according to Mustafa Kheriba, executive chairman of asset management firm Iceberg Capital Limited. According to Kheriba, factors such as high inflation and residents’ desire for investment opportunities with high returns have drawn many to cryptocurrency.
The many benefits of Blockchain
Despite the bearish conditions that persisted for much of 2022, according to Mustafa Kheriba, executive chairman of Iceberg Capital Limited, the interest and use of crypto and blockchain has not disappeared. To support this claim, Kheriba pointed to the 23rd State of the Developer report which suggests that most experienced software developers are “most likely to work on blockchain projects.”
Nevertheless Iceberg Capital Limited The executive chairman told Bitcoin.com News interest has particularly been growing in the Middle East and North Africa (MENA) region where some regulators have seized the initiative by establishing or proposing to create frameworks for the regulation of cryptoassets.
In addition, Kheriba said that factors such as inflation or the weakening of national currencies have played a role in increasing the number of citizens who have embraced crypto. On the other hand, for residents of more prosperous countries, cryptocurrency is increasingly seen as an investment opportunity.
In the rest of his written response sent to Bitcoin.com News via Whatsapp, Kheriba also shared his thoughts on the future of the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
Below are the rest of Kheriba’s responses to the submitted questions.
Bitcoin.com News (BCN): Why is crypto adoption skyrocketing in the MENA region, and would you say users are being pushed toward crypto by external forces or pulled by crypto?
Mustafa Kheriba (MK): Momentum in the MENA region has been building for quite some time now, thanks to several reasons. There are country-specific factors that come into play. Inflation in countries like Egypt and Turkey is pushing people towards crypto as a store of value and a hedge against fiat currency devaluation. This is particularly relevant in countries where the government’s monetary policy is unpredictable and cannot be relied on for stability.
On the other hand, in the Gulf countries, the rapidly evolving regulations, financial institutions, banks and high net worth individuals (HNWIs) are embracing crypto as an investment opportunity. The blockchain technology behind crypto has many advantages, including decentralized finance (Defi) over traditional finance (Tradfi), which are becoming more and more apparent to banking and finance professionals in the region.
Furthermore, the ease of use and cost-effectiveness of cross-border money transfers draw people to crypto. In a region where cross-border payments can be expensive, time-consuming and often opaque, crypto provides a faster, easier and cheaper alternative. This is particularly relevant for migrant workers who are looking for ways to send money home to their families.
Overall, it is a combination of external factors and the unique characteristics of crypto that are driving the soaring adoption of crypto in the MENA region. As the regulatory environment continues to evolve and more people become aware of the benefits of crypto, we can expect to see even more growth in the region’s crypto market in the coming years.
BCN: How do the main drivers of crypto adoption in the MENA region differ from those in the rest of the world?
MK: One of the main differences is the regulatory environment. While the rest of the world is still figuring out how to regulate crypto, the UAE and other Gulf countries have focused on creating a regulatory framework that encourages the development of the market while adhering to AML [anti-money laundering] guidelines. This has created a safe environment for financial institutions, banks and businesses to adopt blockchain technology.
Another factor driving crypto adoption in the MENA region is the emphasis on secure cross-border transfers. The region has a large migrant population, and traditional cross-border payments can be costly and time-consuming. Crypto transfers offer a faster, easier and cheaper option, making them a popular choice in the region.
In addition UAE and specifically ADGM [Abu Dhabi Global Market] in Abu Dhabi, has emerged as a global crypto hub with strong ties to international markets. This has attracted not only private customers, but also large institutions and companies to adopt crypto.
BCN: Do you think crypto-based transfers could one day replace the Society for Worldwide Interbank Financial Telecommunication (SWIFT)?
MK: Indeed, crypto transfers have eaten into the dominance of SWIFT, and countries in the MENA region have increasingly relied on crypto, especially stablecoins, for transfer. The fact that the National Bank of Egypt is already building a crypto transfer corridor between Egypt and the United Arab Emirates, where a large number of Egyptians work, highlights the growing strength of crypto in money transfers.
SWIFT, the current interbank messaging system for cross-border payments, is absolutely inefficient today. Stablecoins and crypto-technology can make cross-border payments seamless, efficient and fast. They solve the problems, at least for money transfers, that SWIFT should have solved over a decade ago.
Will crypto fully replace SWIFT as the preferred mode of transfers? That is unlikely, especially considering that SWIFT’s business continues to evolve. Although their innovations have not been able to keep up with user expectations, historically they have introduced enough innovation to prevent alternatives from posing a serious challenge. As more people become aware of the benefits of crypto-based transfers and the technology continues to evolve, we can expect to see more adoption and integration of crypto into the global financial system. This could eventually lead to crypto-based transfers becoming the preferred mode of cross-border payments.
BCN: How are the likes of ADGM and organizations like the Middle East, Africa and Asia Crypto & Blockchain Association (MEAACBA) helping to accelerate the adoption of blockchain technology at all?
MK: The very fact that we launched our Venom Ventures Fund (VVF) from ADGM speaks volumes about the critical role ADGM plays not only for the blockchain industry, but for the financial sector in general. ADGM has emerged as the jurisdiction of choice for crypto investors and builders in the region. Its proactive regulatory regime allows all participants to collaborate and innovate.
With the Middle East, Africa and Asia Crypto & Blockchain Association (MEAACBA) based in ADGM, MEAACBA has the potential to help accelerate the development of [region’s] blockchain ecosystem by providing its members with a coordination mechanism between government agencies, regulators, banks, legal, tax and advisory firms.
BCN: Can you discuss how the rapidly evolving regulations in the region are likely to impact blockchain adoption?
MK: Historically, regulations have always lagged far behind innovation. Fortunately, that is not the case in the United Arab Emirates, where regulatory initiatives have been innovation-friendly and continue to evolve. A balanced regulatory framework is necessary to ensure that the crypto space is safe for both large institutions, traditional businesses, developers and users. Regulations will lend legitimacy to the blockchain industry and help institutions embrace crypto at a faster pace than ever before.
What are your thoughts on this interview? Let us know what you think in the comments section below.
Image credit: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or an endorsement or recommendation of products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is directly or indirectly responsible for damages or losses caused or alleged to be caused by or in connection with the use of or reliance on content, goods or services mentioned in this article.
