The cryptocurrency industry has experienced significant growth in recent times. The Middle East and North Africa (MENA) region represents the world’s highest cryptocurrency growth markets in the past year with records showing the region has the most crypto transaction volume growth year-on-year contrasted to other regions.
Join Crypto Lists as we get to the heart of this positive news and explore some of the reasons behind the exponential increase in adoption and what the future holds.
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MENA Displays Significant Crypto Growth
There continues to be emerging markets for the crypto industry with an increase in use cases, especially in MENA. Blockchain analysis platform, Chainalysis, published ‘The 2022 Geography of Cryptocurrency Report recently. The transaction volume of the region showcases that it received $566 billion in cryptocurrency between June 2021 and June 2022. It indicates a significant crypto growth in the Middle East and North African region of 48% during this period. It signifies that the adoption of crypto in MENA is rising rapidly.
Crypto growth in the Middle East and North African region compares to the 40% increase in Europe and the 36% increase in North America. There was also a 35% growth in Central and Southern Asia and Oceania.
The Top Emerging Markets in the MENA Region
The MENA region consists of at least 22 countries. Three countries in the MENA region comprise the top 30 in Chainalysis’ 2022 Global Crypto Adoption Index. These include Turkey ranking at 12th, Egypt at 14th, and Morocco at 24th. An increase in practical use cases in these countries drives crypto adoption. These emerging markets use cryptocurrencies in savings preservation and remittance payments. The countries’ enabling crypto regulations have also contributed to increased crypto adoption.
Chainalysis reported Turkey and Egypt have experienced fluctuation in cryptocurrencies’ value with a devaluation of their local fiat currencies. Subsequently, the appeal for using crypto as a savings preservation and remittance payment has been dominant. The Turkish Lira devalued by over 30% during the period. This was a record new low after losing 44% of its value in the previous year after a currency crisis triggered by rate cuts. The Egyptian pound devalued by about 13.5% at the beginning of 2022.
The Role of Egypt and Turkey in MENA’s Crypto Status
Egypt leads the crypto growth in the Middle East and North Africa region after tripling its crypto transaction volume with a Year on Year growth of 221.7%. Saudi Arabia at 194.8% and Lebanon with 120.9% ranked second and third, respectively, in crypto growth in the Middle East and North Africa. Chainalysis attributed Egypt’s growth to the nation’s local economic volatility and the country’s remittance market.
Egypt’s remittance market contributes to 8% of the nation’s GDP. The national bank of Egypt initiated a project to develop a remittance avenue based on crypto between Egypt and the United Arab Emirates. The UAE hosts several Egyptian native workers.
Turkey has the largest crypto market share in MENA by transaction volume. It accounts for $192 billion of the $566 billion of crypto in MENA. Despite having the largest crypto market share, it only recorded a year-on-year growth of 10.5%.
The GCC Contribution to MENA’s Growth
Wealthier countries of MENA, including the Gulf nation of UAE, significantly contribute to the crypto industry in the region in a distinct capacity. The UAE, which hosts the crypto haven of Dubai, and other gulf nations are institutional players of crypto in MENA than peer-to-peer transactions such as remittances. The Gulf Cooperation Council (GCC) region experiences increased crypto adoption due to young tech-savvy citizens with high disposable income considering crypto as an investment option.
Crypto exchanges such as Binance have secured approval to operate in Abu Dhabi, Dubai, and Bahrain. The leading cryptocurrency exchange has also partnered with the UAE to facilitate local businesses transact in crypto via Binance Pay.
Crypto Value Still Low in Parts of the MENA Region
Chainalysis ranked Afghanistan in 20th place in its crypto adoption index report last year with an average volume of $68 million transactions monthly. In the recent report, it ranks last with its transaction volumes shrinking to $80,000 monthly after the Taliban takeover in August 2021. The takeover by the Taliban regime witnessed a crackdown on the industry where Taliban authorities equated the industry to gambling which is against Islamic Sharia Law. It led to several arrests of dealers of crypto that defied the halt of crypto trading and effectively ceased Decentralised Finance in the nation.
This crackdown contributes to the low value of crypto in certain areas within MENA. The region contributes only 9% of the cryptocurrency value globally. This is still far off the largest crypto economy in Central, Northern, and Western Europe at 21.9%, North America at 19%, and Central & Southern Asia and Oceania at 15.8%.