Crypto gains official credence in the UAE

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The cryptocurrency value received by the UAE was nearly $34.9 billion from July 2022 to June 2023, a recent report showed.

According to figures from Chainalysis, the blockchain data platform, the majority (67 per cent) of cryptocurrency transactions in the UAE were for institutional investments (values over $1 million), followed by transfers for professional investments ($10,000 to $1million). Retail investments (up to $10,000) accounted for just 4.63 per cent of transfers in the country. The details were published in Chainalysis’ 2023 Geography of Crypto Report, focusing on the Middle East and North Africa.

Across the Mena region, the UAE was one of the only countries to see a higher share of crypto activity taking place on decentralised exchanges (48 per cent), rather than on centralised exchanges (46 per cent). The outsized popularity of DeFi — which represents the cutting edge of blockchain technology in many ways — in the UAE, further validates the success the country has had in passing innovation-friendly regulatory frameworks that allow groundbreaking crypto platforms to develop with oversight that keeps consumers safe.

“The fact that by far the larger portion of crypto investments in the UAE is for institutional and professional sized transactions, indicates an eagerness from organisations and high-net-worth individuals to add cryptocurrency to their investment portfolios. This market confidence is validation of the efforts being made by the country’s leadership to offer commendable regulatory clarity, and establish the nation as a global crypto hub,” said Kim Grauer, Director of Research at Chainalysis.

While the hype around NFTs (Non-Fungible Tokens) peaked in early 2022 and has since sharply declined, the number of web traffic visits to NFT sites in the UAE was impressively high, exceeding 4 million from July 2022 to June 2023. “This retained interest in NFTs in the UAE offers businesses the opportunity to grow past the hype and start to introduce practical use cases based on this technology. NFTs have the potential to enhance consumer experiences in the UAE through their application in a diverse range of purposes, including title deeds, music festival ticket sales, charity donations, and analysing gaming trends,” said Grauer.

The report by Chainalysis also combined on-chain data and real-world data to measure which countries are leading the world in grassroots crypto adoption. This year, the researchers found that India, the Philippines, and Pakistan all ranked among the top ten — at positions one, six and eight respectively — of their Global Crypto Adoption Index. “This bodes especially well for the UAE where these nationalities represent a significant portion of the expat population. The surging popularity among people of these nations is likely to correlate with increased crypto adoption in the UAE as well,” said Grauer.

While the crypto value received by the UAE during the period under review represented a 17 per cent decrease over the previous year, the country’s crypto market fared much better than many other nations in the region including Qatar (26 per cent decline), Oman (49 per cent decline), Jordan (55 per cent decline), and Lebanon (96 per cent decline). Interestingly, in Saudi Arabia — despite the ‘quasi-legal’ status of cryptocurrencies — the crypto economy grew more this past year than any other country, with a year-over-year transaction volume growth of 12 per cent. In fact, Saudi Arabia was one of just six countries to see any year-over-year transaction volume growth during the time period studied.