Discover how Middle Eastern Countries are embracing cryptocurrency: Unlock the complete insights
The Middle East has a long and rich history. It was one of the hubs of ancient civilizations. Its culture, science, and trading patterns have shaped human history. In the wake of the cryptocurrency revolution, Middle Eastern countries have not been left behind and have quickly overcome political and industry barriers to become the leading players in the crypto space.
Cryptocurrencies are not yet widely used in the Middle East, but their growth rate is impressive. Most Middle Eastern users are investing in cryptocurrencies directly through centralized exchanges.
The present report provides an in-depth overview of the current status of the Middle East cryptocurrency market. It helps not only Middle East users to identify ecosystem positioning and related communities but also Web 3 project teams as well as crypto institutions to gain a better understanding and grow into the Middle East market. In this article, let us look forward to ‘How Middle Eastern Countries Are Embracing Cryptocurrency?
Market Synopsis: Middle Eastern Countries Cryptocurrency Adoption
There are eighteen countries in the Middle East, according to Wikipedia. Let’s examine the UAE, Saudi Arabia, Egypt, Morocco, Algeria, and Jordan in relation to cryptocurrency activity.
When it comes to overall volume and acceptance, the Middle East’s data performance is not particularly noteworthy when compared to other regions of the world; in 2023, the combined Middle East and North Africa accounted for roughly 7.2% of the global cryptocurrency volume. However, the Middle East continues to play a crucial role in the cryptocurrency world because of its liberal policies and quick development. Morocco, Egypt, Algeria, Saudi Arabia, Jordan, and the UAE were ranked 20th, 35th, 47th, 57th, 66th, and 78th, respectively, in Chainalysis’s 2023 Adoption Index.
How Middle Eastern countries are embracing cryptocurrency? Remarkably, the adoption of centralized platforms and decentralized applications in the Middle East differ greatly between nations. While Saudi Arabia and the UAE have much stronger global rankings in DeFi usage compared to their rankings for centralized platforms, Morocco’s data is relatively balanced, ranking in the top 20s globally in all five Adoption Index aspects. Egypt, Algeria, and Jordan have much lower DeFi rankings than their centralized platform rankings.
Furthermore, it is noted that the UAE is not among the top 100 countries in the world for P2P trading. This suggests that the nation has more convenient ways to access funds and is less dependent on P2P for deposits and withdrawals of fiat currency.
Middle Eastern nations have differing views on cryptocurrency regulation because of their disparate economic development levels and rates of cryptocurrency adoption. This section presents a comparison and contrast of the “policy-shifting,” “regulation-friendly,” and “strongly regulated” types of Middle Eastern regulatory policies. Of the nations in the survey, the United Arab Emirates is regarded as “regulation-friendly,” Saudi Arabia, Jordan, Egypt, and Morocco are regarded as “policy-shifting,” and Algeria is classified as “strongly regulated.”
Influence of culture in Middle Eastern nations
While Muslim nations in the Middle East have varied views and policies regarding cryptocurrencies, Islamic jurisprudence generally has an impact on their laws. Islamic law prohibits a number of financial activities, including gambling, usury, and transactions involving unethical or illegal behavior. Traditional Islamic law discourages Muslims from engaging in highly volatile cryptocurrency transactions because of the market’s historically high volatility and unpredictability. The perception of cryptocurrencies in Muslim countries has started to shift, though, as assets like Bitcoin and other cryptocurrencies have become more regulated in recent years.
Several Muslim nations are also working to create laws that accommodate new developments in the financial sector and, to some extent, acknowledge and encourage the growth of cryptocurrencies. For instance, Dubai, United Arab Emirates, is open to these emerging technologies and intends to become a hub for blockchain and cryptocurrency innovation.
About 330,000 people in the Middle East were actively trading cryptocurrencies on centralized exchanges every day in February 2023. By February 2024, there were about 500,000 daily active users trading cryptocurrencies on centralized exchanges in the Middle East, thanks to the approval of spot BTC ETFs and the ongoing rise in the market capitalization of the cryptocurrency spaces
The trading density of several Middle Eastern countries on centralized exchanges in February 2024 was estimated to be between 100,000 and 150,000 users. Interestingly, the populations of the UAE and Morocco are roughly one-third that of Saudi Arabia and Egypt, but they still have relatively similar trading depths. This is due to the fact that, in contrast to Saudi Arabia and Egypt, centralized cryptocurrency exchanges are more well-liked and used in the United Arab Emirates and Morocco.
In the Middle East, Morocco had the fastest annual growth in trading users over the past year—a 148% increase—followed by the United Arab Emirates and Egypt, at roughly 70%. The data for Saudi Arabia in February 2024 did not change from February 2023, primarily due to a decrease in traffic on three of the five most popular centralized exchanges. Since Saudi Arabia had the largest annual growth in cryptocurrency trading from 2022 to 2023, according to multiple sources, this phenomenon may also be the result of Saudi Arabia’s growth cycle starting earlier than that of other nations.
Users in the Middle East are receptive to cryptocurrency trading and participating in projects, as evidenced by the following: High reliance on CEXs: The word cloud’s presence of terms like “exchange” suggests that Middle Eastern users rely more on CEXs than DEXs, Transferring funds using cryptocurrencies: Middle Eastern users transfer funds using cryptocurrencies rather frequently, mostly because local currencies depreciate quickly and traditional banks are not widely accepted in many of the region’s nations. Interest in meme coins: Users from the Middle East are very interested in making bets on meme coins, keeping an eye on the market’s heat map, and being able to quickly identify trends in the cryptocurrency market. Regarding traditional finance, the fact that “Blackrock” is quickly becoming a popular search term among users in the Middle East indicates that they are interested in learning how TradFi practices, like holding Bitcoin ETFs, affect the cryptocurrency market.
Platform Benefits and The Competitive Environment
Exchanges that are centralized:
How Middle Eastern countries are embracing cryptocurrency? Over the course of the past year, there has been a noticeable increase in the amount of traffic coming from Middle Eastern nations to centralized exchanges. The growth in unique visits (UV) for Morocco and the United Arab Emirates was 71% and 60%, respectively. Data from Egypt indicated a 25% YoY increase in traffic, while Saudi Arabia saw a slight decline, perhaps as a result of its user base entering a phase of rapid growth earlier than other countries. As previously mentioned, according to multiple sources, Saudi Arabia saw the greatest year-over-year growth in cryptocurrency trading between 2022 and 2023.
There is little variation in traffic to centralized exchanges between major Middle Eastern nations. The monthly unique visits to centralized exchanges in the United Arab Emirates, Morocco, Egypt, and Saudi Arabia vary from 700,000 to 1,000,000, despite the obvious variations in the total population. Middle Eastern nations rely heavily on international centralized exchanges; local exchanges barely rank in the top 10 in terms of traffic volume. The low diversity of tradable assets, shallow trading depth on local exchanges, and the abundance of convenient local currency deposit and withdrawal channels on numerous international centralized exchanges could all be contributing factors to this.
Dispersed trades: Middle Eastern Countries Are Embracing Cryptocurrency
Decentralized exchanges are widely used by Middle Eastern users; they are mainly focused on the best decentralized exchanges on blockchains like Solana, BSC, and Ethereum, like Uniswap, PancakeSwap, and Raydium. Additionally, decentralized exchange aggregators such as Jupiter and 1inch are utilized.
The majority of users go straight to these decentralized exchanges, but some do so via links from social media, Google searches, and market websites. This suggests that users in the Middle East are very conscious of the reputation of decentralized exchanges, and they also tend to be fairly brand loyal once they get into the habit of using a certain platform.
The Middle East has a long and rich history as one of the world’s oldest civilizations. As the global cryptocurrency market continues to grow, Middle Eastern countries have re-evaluated cryptocurrencies in an open and inclusive manner, making it one of the most rapidly growing regions for cryptocurrency adoption.
At present, the Middle East is one of the fastest-growing crypto markets, with about half a million daily traders. The UAE has some of the most crypto-friendly policies, and other Middle Eastern countries are in the process of improving their policies, moving away from initial bans and towards compliance with regulations.
When it comes to chain preferences and how Middle Eastern countries are embracing cryptocurrency, the Middle Easters are keen to participate in decentralized projects. They are well-versed in the DEX tools on the on-chain platform, and are ready to dive into the metaverse and games, as well as on-chain tasks platforms. On-chain users have seen a sharp rise in recent years, with the number of users on the rise. Institutional users in the Middle East tend to invest in the core crypto assets, such as BTC. Retail investors have a broader range of interests and are open to speculating on meme Coins.
For the Middle East, traffic to centralized exchanges has been steadily increasing over the last year, suggesting a higher demand for centralized exchanges among Middle East users compared to decentralized exchanges. When it comes to decentralized exchanges, Middle East users primarily use leading decentralized exchanges on different chains, including Uni swap, Pancake Swap, and others. The most popular wallets used by Middle Easterners are Trust Wallet and Meta mask, with Phantom being the most popular. Other popular wallets include Coinbase Wallet, Bit get Wallet, and more.
