MENA has become one of the largest cryptocurrency markets in the world in recent years. Between 2021 and 2022, crypto transactions in the region increased by 48%; today, it represents 9.2% of global cryptocurrency transactions, according to chainanalysis.
This large-scale crypto adoption has been driven by the region's DeFi and blockchain-friendly economic climate. Compared to other areas, MENA countries impose less regulatory scrutiny, which promotes broader adoption of a decentralized digital economy.
The question is, will this growth continue over the next few quarters of 2023 and how will the crypto market further evolve in this region?
Why MENA continues to lead cryptocurrency adoption?
The main reason for cryptocurrencies to thrive in these countries is that almost 55% of the region's population is under 30 years of age. Younger, 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 its countries suffer from inequalities income distribution and high levels of youth unemployment. Therefore, the population is looking for alternative financial instruments.
And third, there is a growing awareness of blockchain and decentralized technology in the region. Eager to gain an advantage over Western markets and strengthen their economic positions, businesses and the government are exploring the benefits of blockchain to streamline processes, increase transparency, and reduce costs.
Which MENA countries are leading the crypto market in 2023?
According to Chainalysis Global Crypto Adoption Index 2022three MENA countries were among the top 30 regions by adoption rate: Turkey (12), Morocco (14) and Egypt (24).
Tรผrkiye has seen a continuous shift towards greater crypto adoption. In January 2023, The Nation Alliance, the main opposition political party, released its 13-point electoral doctrine directly aimed at increasing cryptocurrency adoption. So if Turkey's political power shifts, it may further boost the already booming cryptocurrency adoption in the country.
In Morocco, the central bank (Al-Maghrib Bank) is drafting a crypto law to protect people from business risks. This regulatory framework will further improve adoption in the country, as Moroccans will have the support of the national bank.
Another region worth mentioning is Dubai, which is constantly transforming itself into a crypto hub. In addition to new startups, industry giants like Crypto.com are moving their operations centers to Dubai to benefit from its favorable tax policies and regulations. Local projects, like islamic currencythey are using technology to bring inclusion to the Muslim population by creating accessible financial tools that are Shariah compliant.
What factors are driving the growth of the industry?
The latest projections show that the global crypto market will see a compound annual growth (CAGR) of 11.9% over the next seven years. This will bring the market value, which is currently $4.7 billion, to $12.1 billion by 2030.
Since market growth is most prominent in the MENA region, this global growth will obviously drive the market value of the region. The Gulf countries, in particular, have shown great interest in welcoming cryptocurrency and blockchain entrepreneurs.
For example, in the United Arab Emirates, investors and entrepreneurs enjoy 0% tax about cryptocurrency earnings; other leading countries in the region such as Turkey It also does not impose any tax on cryptocurrency earnings. As a result, more than 3,000 cryptocurrency, blockchain, and digital asset startups were registered in the country in the past year alone.
The DMCC Free Trade Zone in the United Arab Emirates will further influence more startups and existing companies to relocate their businesses to the region. Gartner Forecasts predicts that the region's total IT spending will grow by at least 3% in 2023, meaning more investment will go into evolving digital asset technologies like blockchain and using it to solve current problems.
In conclusion, MENA countries will continue to be the leading market for the digital asset industry. As regulators embrace the concept of a fully digital and decentralized economy, more blockchain and crypto-based companies will move to the region, allowing the market to grow further in 2023 and beyond.
