The Middle East is gradually liberalising as a market for cryptocurrencies due to the legal support and the increasing confidence in the market. The number of daily traders has also grown by 166 percent YoY, from about 300,000 in February 2023 to more than 500,000 in February 2024, as per the data gathered by Bitget Research. This growth rate indicates that the region has the possibility of becoming one of the biggest crypto markets in the world, with UAE, Saudi Arabia, and Qatar at the forefront.
Bitget’s extensive report attributes the surge in crypto traders to favorable local regulations, the approval of Bitcoin ETFs, and increased investor interest in digital assets amid a recovering crypto market. The United Arab Emirates (UAE) leads the list, with 72 percent of the users investing in Bitcoin. This trend shows that the regional governments are moving from a complete ban to friendly regulations to encourage investors and exchanges.
This has put the UAE among the most suitable countries for the cryptocurrency business due to its positive stance towards it. In September 2024, Reuters stated that Standard Chartered Bank had entered the crypto custody services in the UAE, and the country was described as having a middle-of-the-road approach to crypto and financial regulation. The UAE has also been clear on virtual assets, which has made it host some of the world’s largest exchanges, such as Binance and OKX, making it a competitive Gulf region player.
Likewise, Qatar, which prohibited the use of cryptocurrencies in 2018, developed a set of laws on cryptocurrencies in September 2024. Some of the topics that are discussed at CoinDesk include the Qatar Financial Centre’s Digital Asset Regulations. Yousuf Mohamed Al-Jaida, the Chief Executive Officer of QFC, noted that these regulations have the potential to attract both foreign and domestic investors and improve the financial sector of Qatar.
Chainalysis research also places the Middle East in the middle of the crypto economy with 7.5% of the global transaction volume from July 2023 to June 2024, which is about USD338.7 billion. The UAE has been leading this volume with new laws, such as a Dubai court ruling in August 2024, which accepted crypto as legal tender for employment contracts. This is a clear indication that society is gradually moving towards adopting and using digital currencies.
Binance CEO Richard Teng expressed his gratitude to the region for ‘coming out as a global leader’ in terms of clear and coherent crypto regulation, especially the UAE frameworks. Teng also pointed out that the Middle East has been able to encourage innovation, and at the same time, the region’s regulatory environment is relatively clear compared to other regions that are not very clear on their regulations.
Another major development was made in December 2024 when the UAE Central Bank approved “AE Coin”, the first fully regulated dirham-backed stablecoin as per the details of AGBI. This regulatory step enables the use of AE coin for domestic transactions but does not permit the use of other cryptocurrencies like Bitcoin or a stablecoin that is anchored to the US dollar for domestic transactions. It should be noted that the rules do not apply to free zones like the Dubai International Financial Centre (DIFC) in Dubai and Abu Dhabi Global Market (ADGM) but as AE Coin is linked to UAE reserves, it aligns with the country’s strategy to encourage the use of digital assets for both trust and utility.
There is a gradual shift towards the acceptance of the use of cryptocurrencies in the Middle East, particularly Bitcoin, due to stability and certainty of the laws governing the use of the cryptocurrencies.
Regulatory advancement and change in culture will bring the Middle East further into the global crypto map. As Gracy Chen of Bitget and Richard Teng of Binance have noted, the region, particularly the UAE, is now among the most popular places for crypto talent, businesses, and developments.