The Middle East has proven to be an attractive location for the development of Web3 technologies. For example, only in Dubai, OKX, a cryptocurrency exchange, was granted an MVP preparatory license in June; Bybit, another cryptocurrency exchange, thrown out its new headquarters in April 2023; and his police force began a blockchain service to help people recover their passports when such an incident occurs.
In a comprehensive breakdown of how the industry has thrived in both the Middle East and North Africa, Emurgo noted some key factors that have changed over time and what the region is focused on.
First was revealed that โin both the Middle East and North Africa (MENA)) region was the fastest growing crypto market between 2021 and 2022.โ Then in Egypt, Emurgo said that the blockchain regulatory landscape is developing and evolving.
Although cryptocurrency trading is explicitly prohibited and enforcement is carried out through religious decrees and laws that prohibit cryptocurrency-related activities, violators can face prison terms and fines.
While this ban is in place, the use of cryptocurrencies in Egypt is increasing, indicating a growing demand. In 2020, the Egyptian parliament approved a law that introduced digital tools for the digital transformation of the banking sector, including cryptocurrencies, digital finance and digital check settlement. The law also provided definitions and licensing instructions for digital banks.
Web3 expansion in UAE
Focusing on the United Arab Emirates (UAE), which is a country with seven states, Emurgo said that it has a favorable regulatory environment for blockchain technology. The UAE government has implemented various initiatives to support the growth of the Web3 industry.
In 2018, the Emirates Blockchain Strategy 2021 was thrown outwith the goal of adopting blockchain in 50% of government transactions, which is expected to help save AED 11 billion (approximately USD 3 billion).
The Blockchain Committee was established in the same year to develop and implement a comprehensive national strategy for blockchain. The UAE has also established the Global Blockchain Council, which comprises 46 members and aims to promote blockchain technology in various industries, improving efficiency and reliability.
Regarding crypto regulatory trends in the UAE, the country has regulations aligned with the Financial Action Task Force (FATF) and the Middle East and North Africa FATF for anti-money laundering (AML). The Virtual Assets Regulatory Authority (VARA) has published guidelines on the marketing, advertising and promotion of virtual assets.
Authorities are evaluating their focus on other areas of digital assets, including stablecoins and decentralized finance (DeFi). In addition, the Central Bank of the UAE (CBUAE) is exploring and testing the possibility of issuing a wholesale Central Bank Digital Currency (CBDC) through international projects.
Abu Dhabi and Dubai
Emurgo added that Abu Dhabi, which is a state in the United Arab Emirates, has also embraced blockchain technology. In 2022, the Abu Dhabi government organized the Middle East Blockchain Awards (MEBA) to recognize contributors to the development of blockchain technology.
The Financial Services Regulatory Authority (FSRA) inserted a comprehensive framework in 2018 for companies to trade virtual assets within the Abu Dhabi Global Market (ADGM), covering multilateral trading facilities, custodians and brokerage firms.
Various companies and organizations in Abu Dhabi using blockchain technology include Bonds Without Borders, Abu Dhabi Commercial Bank (ADCB), Abu Dhabi Islamic Bank, Smarthub, and Abu Dhabi Global Market Courts.
Then in Dubai, Sheikh Hamdan, Crown Prince of Dubai, thrown out Dubai Blockchain Strategy in 2016 as a collaborative effort between Smart Dubai Office and Dubai Future Foundation. The strategy aims to transform Dubai by integrating blockchain technology into various aspects of daily life.
The city expects to achieve annual savings of 5.5 billion dirhams (approximately $1.5 billion) in document processing alone, which is equivalent to the value of one Burj Khalifa, the iconic skyscraper, each year.
One of the key goals of the Dubai Blockchain Strategy is to use blockchain technology to fully empower the city of Dubai, showcasing the vast potential and applications of blockchain in various sectors.
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