Crypto adoption skyrockets in Middle East and North Africa due to favorable economic climate


Image Credits: Yuichiro Chino

The Middle East and North Africa (MENA) was the fastest growing crypto market in 2022, according to a new report by Chainalysis.

Users in the region transacted $566 billion in cryptocurrency between July 2021 and June 2022, up 48% from a year earlier, the report found. In comparison, crypto transactions rose 40% in Latin America, 36% in North America, and 35% in Central and Southern Asia. Other regions saw growth of 22% or less.

For the report, Chainalysis conducted interviews in countries to cast what it described as a “really wide net” and talked to regulators, private businesses, OTC brokers and anyone who operated in crypto across the regions, Kim Grauer, director of research at Chainalysis, told TechCrunch.

An image of a chart showing year over year growth of crypto transactional volume by Chainalysis
Image Credits: Chainalysis(opens in a new window)

In MENA, Turkey remains the largest cryptocurrency market — its citizens used $192 billion of crypto in the period, the report said.

“Based on the data, we see a ton of activity across the board in Turkey, Lebanon, Saudi Arabia, Egypt and the UAE, and that’s just raw transaction value,” Grauer said.

Saudi Arabia and UAE stand out when adjusting for metrics like population size and relative purchasing power, Grauer noted. “In terms of their kind of becoming a crypto hub/hotspot, whether it’s because of regulatory initiatives to develop that market or because there’s more disposable income and [they’re] seeking alternative investments, those two areas seem to be attracting international businesses to relocate there.”

Other MENA countries like Lebanon or Turkey have more economic incentives surrounding currency depreciation and devaluation that are “pushing people into cryptocurrency in those regions.”

“UAE and Saudi Arabia are developed markets that are more comparable to North America and Western Europe,” Grauer said. “When we talked to people, we heard a lot of the same things: There [are] good investment opportunities, interesting concepts, 24-hour markets, regulations and so on.”

But the conversations were different when it came to Latin America, which ranked No. 2 on the list. “We didn’t hear a whole lot of that in Latin America; in fact, we didn’t hear anything in Latin America about innovative technologies and what the future is going to be like,” Grauer said.

“I think gradually it will become more attractive in the face of horrific economic challenges that countries like Argentina and Venezuela are facing — not to put them in the same bucket, but you have hyperinflation in Venezuela and currency problems in Argentina as well,” Grauer said. She added that, comparatively, Brazil had a more developed traditional equities market, with more high-value transfers and institutional-level payments, which is not being talked about in Argentina, Venezuela or Mexico.

Separately, MENA is also home to three of the top 30 countries in Chainalysis’ Global Crypto Adoption Index: Turkey, Egypt and Morocco. The top of the list? Vietnam.

The index ranks all countries by measuring where the most people are putting the biggest share of their money into crypto, Chainalysis said in a post. “While institutional activity is important to that, we also want to highlight the countries where individual, non-professional investors are embracing digital assets the most.”

In general, emerging markets dominated the index, with 10 “lower middle income” countries, eight “upper middle income” countries, and two “high-income” countries (U.S. and U.K.).

Users in lower-middle and upper-middle income countries tend to rely on crypto like Bitcoin or stablecoins for remittance, preserving savings during volatility and other financial needs.

“On the optimistic side of things, cryptocurrency is bringing financial inclusion and opportunities to more people in a more efficient way,” Grauer said. “Of course, if you’re missing the infrastructure, you’ll miss out on that opportunity; but each year, we see more and more growth in crypto usage around the world. I expect that to continue to rise, and some countries will lean further into cryptocurrency.”

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