MENA’s Crypto Market: Growth, Adoption and Future
MENA has emerged as one of the world’s largest cryptocurrency markets in recent years. Between 2021 and 2022, crypto transactions in the region increased by 48%; today it accounts for 9.2% of global cryptocurrency transactions, according to Chainalysis.
This large-scale crypto adoption has been fueled by the region’s DeFi and blockchain-friendly economic climate. Compared to other areas, MENA countries impose less regulatory scrutiny, promoting wider adoption of a decentralized digital economy.
The question is, will this growth continue through the next quarters of 2023 – and how will the crypto market develop further in this region?
Why does MENA continue to lead in cryptocurrency adoption?
The biggest reason why crypto is thriving in these countries is that almost 55% of the region’s population is under 30 years old. Younger and more tech-savvy people are more eager to embrace technological and financial innovations, including cryptocurrencies.
Second, the MENA region is going through a social and economic revolution: many of the countries suffer from unequal income distribution and high youth unemployment. Therefore, the population is looking for alternative economic instruments.
And third, there is a growing awareness of blockchain and decentralized technology in the region. Eager to gain an edge over Western markets and strengthen their economic positions, businesses and government are exploring the benefits of blockchain to streamline processes, increase transparency and reduce costs.
Which MENA countries will lead the crypto market in 2023?
According to Chainalysis’ 2022 Global Crypto Adoption Index, three MENA countries were among the top 30 regions by adoption rate: Turkey (12th), Morocco (14th) and Egypt (24th).
Turkey has seen a continuous shift towards increasing crypto adoption. In January 2023, The Nation Alliance, the leading political opposition party, released its 13-point election doctrine directly aimed at increasing crypto adoption. Then, should Turkey’s political power change, it could further boost the country’s already booming cryptocurrency adoption.
In Morocco, the central bank (Bank Al-Maghrib) is drafting a crypto law to protect individuals from trading risks. This regulation will further improve adoption in the country, as Moroccans will have the National Bank’s support.
Another region worth mentioning is Dubai, which is steadily transforming into a crypto hub. In addition to new startups, industry giants such as Crypto.com are moving their operational hubs to Dubai to take advantage of its favorable tax policies and regulations. Local projects, such as Islamic Coin, are using the technology to bring inclusion to the Muslim population by creating Shariah-compliant, accessible financial tools.
What factors drive the industry’s growth?
The latest estimates show that the global crypto market will have a compound annual growth rate (CAGR) of 11.9% over the next seven years. This will take the market cap, currently at $4.7 billion, to $12.1 billion by 2030.
As the market’s growth is more prominent in the MENA region, this global growth will obviously increase the region’s market value. The Gulf countries in particular have shown keen interest in welcoming crypto and blockchain entrepreneurs.
For example, in the United Arab Emirates, investors and business owners enjoy 0% tax on cryptocurrency profits; other leading countries in the region such as Turkey also impose no tax on cryptocurrency profits. As a result, over 3,000 new crypto, blockchain and digital asset startups were registered in the country in the past year alone.
The DMCC Free Trade Zone in the UAE will further influence more startups and existing companies to relocate their operations to the region. Gartner’s forecasts predict that overall IT spending in the region will grow by at least 3% by 2023, meaning more investment will go into developing digital asset technologies like blockchain and using them to solve current problems.
In conclusion, the MENA countries will remain the leading market for the digital assets industry. As regulators embrace the concept of a fully digital and decentralized economy, more blockchain and crypto-based businesses will move to the region, allowing the market to grow further in 2023 and beyond.
