Chainalysis recently shared key insights from its 2024 Geography of Cryptocurrency Report.
According to the Chainalysis research report, the MENA region ranks as the seventh-largest crypto market globally in 2024, with “an estimated $338.7 billion in on-chain value received between July 2023 and June 2024, accounting for 7.5% of the world’s total transaction volume.”
Chainalysis pointed out that although the market is “smaller compared to other regions, MENA includes two countries ranked in the top 30 of the global crypto adoption index: Turkey (11th) and Morocco (27th), capturing $137 billion and $12.7 billion of value received, respectively.”
The majority of crypto activity in MENA is “driven by institutional and professional-level activity, with 93% of value transferred consisting of transactions of $10,000 or above.”
As stated in the Chainalysis research study, centralized exchanges (CEXs) remain “the primary source of crypto inflows across MENA overall, indicating that most users and institutions still prefer traditional crypto platforms, but decentralized platforms and DeFi applications are steadily gaining traction, as seen in the heatmap below.”
Notably, Saudi Arabia and the UAE demonstrate “high interest in decentralized platforms.”
The research report from Chainalysis added that the “majority of DeFi activity across MENA occurs on DEXs, with Saudi Arabia participating in other DeFi activities at a marginally higher share than the other nations shown.”
As mentioned in the research report, Saudi Arabia, “a G20 economy with a population of over 30 million, benefits from a disproportionately young population — around 63% of its citizens are under 30 years old.”
As explained in the Chainalysis update, this demographic is “especially meaningful from an emerging technology perspective, as younger generations tend to be more open to experimenting with new financial technologies.”
The UAE also shows higher DeFi adoption “than the global average, likely attributable to its progressive regulatory stance which has fostered clarity around specific classes of crypto participation.”
The report from Chainlysis further noted that the UAE’s proactive and collaborative regulatory approach to crypto and web3 companies “has attracted a diverse range of users, and solidified the UAE as a hub for DeFi and broader crypto activity.”
In contrast, the report pointed out that users in Türkey and Qatar remain “heavily reliant on CEXs, with lower DeFi participation compared to global averages.”
The report clarified that it is important to note that both Saudi Arabia and Qatar do “not yet have a comprehensive regulatory framework in place for virtual asset service providers (VASPs) and therefore do not yet have local CEXs, but encouraging new developments in Qatar that allow companies to apply for a license to become token service providers could reshape the landscape in the future.”
Beyond fostering innovation, DeFi offers an alternative financial system “for the unbanked and underbanked, which is critical for a region where less than 50% of adults, excluding high-income economies, had a bank account as of 2021.”
The Chainalysis report added that “while DeFi adoption may not yet be widespread in some of these regions, its ability to provide financial services without intermediaries could drive future financial inclusion, opening up new opportunities for individuals in underserved areas, and empowering them with access to loans, savings, and investment tools previously unavailable.”
As stated in the Chainalysis research report, regulatory strides “made across key markets in the region in 2024 are likely to further shape the distribution of DeFi and CEX platforms, impacting financial inclusion and the broader adoption of decentralized financial systems.”
Across MENA, the report revealed that stablecoins and altcoins “are gaining market share over traditionally preferred assets like bitcoin and ether, particularly in Turkey, Saudi Arabia, and the UAE, which have higher shares of stablecoin volume.”
The report from Chainalysis also mentioned that Ether (ETH) usage across the region is “relatively consistent, but falls below the global average, with Türkiye leading in engagement.”
Meanwhile, Israel and Saudi Arabia demonstrate “a strong interest in altcoins, well above the global average, possibly reflecting a higher risk appetite and interest in a wider variety of assets beyond the major cryptocurrencies.”
Last year, Israel completed a successful government bond tokenization pilot, “aligning with broader industry interest surrounding tokenized assets — a sector which McKinsey predicts could reach $4 trillion by 2030.”