This is the year that cryptocurrency comes of age in Middle East The Middle East’s banks and financial regulators have taken longer to accept cryptocurrency than Europe or the US. Before the pandemic, the Middle East’s crypto market was still in its infancy. After two years of rapid development, 2022 will see the industry’s leadership in cryptocurrency after the excitement that has grown around it.
In the last 12 months, we’ve seen a growing trend in cryptocurrency usage in the Middle East.
Numerous cryptocurrency exchanges have been launched and received funding, including Yoshi Markets, CoinMENA, BitOasis and CoinMENA. One of the clearest indications that crypto is about to take flight is the news that came out of Bahrain recently regarding Rain, the region’s first Sharia-compliant cryptocurrency platform.
The exchange is supported byAl Waha partner fund VentureSouq and Middle East Venture Partners, 500 Startups and 500 Startups all raised $110m in a Series B round, co-led in part by Kleiner Perkins. Paradigm is the largest crypto fund globally. This is the largest investment deal for any startup in North Africa or the Middle East, and it sets the tone for future developments in the region’s crypto markets.
Fintech is a leading sector in the GCC, with Bahrain being a particular leader. This sector is in fact thriving. expanding at a compounded annual growth rate of 30 per cent. Flexible regulatory frameworks and rapid digital transformation combined with a strong appetite for innovation in the financial sector are among the factors contributing to the region’s emerging position as a fintech hub, where technologies such as open banking and cryptocurrency can thrive.
As countries begin to accept digital transactions and encourage them, cryptocurrency is getting more support and investment from traditional institutions in the Middle East financial markets. Regulations are being made to encourage the growth of crypto clusters. This could have a significant impact on the adoption of digital currencies.
The UAE government has created a crypto zone at Dubai World Trade Centre (DWTC) where cryptocurrencies are regulated. FTX Exchange, one of the world’s largest exchanges was recently granted a licence to operate in the UAE while Binance also signed a deal to developThe UAE has a new industry hub that focuses on digital innovation and crypto currency. Bahrain’s central bank also approved the exchange, marking the first regulatory approval for a Binance entity within the Middle East.
Saudi Arabia has also made itself known as a hub for cryptocurrencies and is preparing to embrace digital transactions in its diversification efforts. Last year, the Saudi Central Bank (SAMA), announced that it would implement an open banking policy. This will encourage competition and increase transparency in financial transactions data.
As a leader in financial services, Bahrain is at the forefront of the region’s impending crypto boom. The Kingdom has gained access to European markets through CoinMENA. This is an onshore exchange that was granted a licence from the European Union.This license opens up new territories and increases the number crypto assets available on the platform. CoinMENA was the fastest growing cryptocurrency exchange, growing an average of 140% per month.
The Central Bank of Bahrain also launched FinHub 973, a first of its kind virtual fintech platform to allow companies to test their solutions through the Regulatory Sandbox and connect with the hub’s global network for funding and business opportunities. FinHub 973 is all about supporting innovation in the sector and is a good example of the driving forces behind the region’s shifting fintech landscape.
The evolving landscape of the Middle East’s fintech ecosystem signifies the willingness of governments, regulators and the private and public sectors to embrace and empower digital innovation. It is evident that many countries now recognize the importance of cryptocurrency and the impact digital transactions will have on the way we trade money and goods.
Perhaps it is not surprising that cryptocurrency adoption in the GCC has been increasing due to the diverse national visions, strategies, and plans that have been developed to encourage new business and economic diversification amid growing competition.
It is evident that change is happening faster than it was last year. As the Middle East’s economic powerhouses increasingly adopt and nurture cryptocurrency over the next 12 months, we can expect to see the market coming of age and contributing significantly to the region’s overall growth and development.