Survey: North Africa, Middle East Top World In Cryptocurrency Adoption

The Middle East & North Africa (MENA) region has emerged as the global leader in cryptocurrency adoption, with users receiving a whopping $566 billion in digital assets from July 2021 to June 2022, according to a recent report by Chainalysis, a blockchain data platform. This marks a significant 48% increase from the previous year.

The report attributes the surge in cryptocurrency usage to a combination of factors, including increasing crypto-friendly regulations and the need to preserve savings amidst volatile fiat currency markets. Countries like Turkey and Egypt, where the national currencies have experienced significant devaluation over the past year, have seen a rise in cryptocurrency adoption as individuals turn to digital assets as a means of protecting their savings.

The report also highlights the importance of the remittance market in Egypt, which accounts for about 8% of the country’s GDP. The Egyptian national bank has already started a project to build a crypto-based remittance corridor between Egypt and the UAE, where a significant number of Egyptian nationals work.

As the popularity of cryptocurrency continues to grow in the MENA region, governments and financial institutions are increasingly recognizing the need to establish regulatory frameworks to protect investors and promote innovation in the space.

The Chainalysis report suggests that continued progress in this direction could lead to even greater adoption of cryptocurrency in the region in the years to come.

As the key business hubs of the Mena region, the member states of the Gulf Cooperation Council (GCC) are fast emerging as key players in the crypto market, the report noted. Saudi Arabia, for example, is the third-largest crypto market in all of Mena, and UAE is fifth.
They also have deep ties to the global crypto markets.

Akos Erzse, Senior Manager for Public Policy at Dubai-based crypto exchange BitOasis, said the main drivers of crypto adoption in the GCC are different from those in the rest of Mena.

“When you look at markets in the GCC, we take the view that this adoption is driven by young, tech-savvy early adopters with relatively high disposable incomes searching for investment options, and have a conviction in crypto right now. Moreover, adoption is not just on the retail or customer side, but also in the ecosystem, with financial institutions and banks beginning to work with businesses like us,” Ersze said, adding that recent inflation has played in pushing cryptocurrency adoption in other parts of the region.

Globally, Chainalysis data show that global adoption has levelled off in the last year after growing consistently since mid-2019.

Global adoption of cryptocurrency reached its current all-time high in Q2 2021. “Since then, adoption has moved in waves – it fell in Q3, which saw crypto price declines, rebounded in Q4 when we saw prices rebound to new all-time highs, and has fallen in each of the last two quarters as we’ve entered a bear market,” the report said. However, global adoption remains well above its pre-bull market 2019 levels.

The data suggests that many of those attracted by rising prices in 2020 and 2021 stuck around, and continue to invest a significant chunk of their assets in digital assets. “Cryptocurrency markets have been surprisingly resilient through recent declines. Big, long-term cryptocurrency holders have continued to hold through the bear market, the on-chain data suggests those holders are optimistic the market will bounce back, which keeps market fundamentals relatively healthy,” the report said.

Emerging markets dominate the Global Crypto Adoption Index. “Users in lower middle and upper middle income countries often rely on cryptocurrency to send remittances, preserve their savings in times of fiat currency volatility, and fulfil other financial needs unique to their economies. These countries also tend to lean on Bitcoin and stablecoins more than other countries,” the report said.

For the second consecutive year, Vietnam ranked first in cryptocurrency adoption. A look at the sub-rankings shows that “Vietnam shows extremely high purchasing power and population-adjusted adoption across centralised, DeFi, and P2P cryptocurrency tools. Polling done in 2020 found that 21 per cent of Vietnamese consumers reported using or owning cryptocurrency,” the report said.

While growth has become more sporadic with the onset of the latest bear market, global adoption remains well above the levels that preceded the 2020 bull market. The data suggests that “a critical mass of new users who put capital into cryptocurrency during periods of price growth tend to stay even when prices decline, allowing the ecosystem to consistently grow on net across market cycles,” the report said.

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