US blockchain analysis firm Chainalysis released its latest report Wednesday, indicating that the region of the Middle East & North Africa (MENA) enjoys the fastest growing tendency in terms of cryptocurrency adoption despite it is viewed as one of the smaller crypto markets in the global adoption index.
According to the report, users in the MENA region obtained $566 billion in cryptocurrency from July 2021 to June 2022 – an increase of 48% from what they received the year before.
The report further identified MENA as the home to three of the top thirty countries in this year’s index: Turkey (12), Egypt (14), and Morocco (24). The research identified the key drivers of such adoption in these nations include savings preservation, remittance payments, and increasingly permissive crypto regulations.
In Turkey and Egypt, rapid fiat currency devaluations have strengthened the appeal of cryptocurrency for savings preservation among users. As of August, Turkish inflation hit 80.5%, while the Egyptian Pound weakened by 13.5%.
Between July 2021 and June 2022, the report showed that the crypto transaction volume in Egypt tripled compared to the previous year. Turkey remains the largest crypto market in the region, with its users receiving $192 billion during the same period, per the document.
The report further identified that Morocco’s inflation rates have reached a more manageable level of 5.3%. However, the North African country’s significant levels of crypto adoption appear to be tied to the government’s newly permissive crypto stance. In 2017, the central bank of Morocco declared penalties and fines for users found transacting cryptocurrencies within the country. But earlier this year, the central bank formed a partnership deal with the IMF and the World Bank to create crypto regulations that emphasize innovation and consumer protection.
The report further acknowledged that while the member states of the Gulf Cooperation Council (GCC) – Saudi Arabia, Kuwait, the United Arab Emirates (UAE), Qatar, Bahrain, and Oman – rarely make it to the top of the crypto adoption index, their role in the crypto ecosystem can never be underestimated.
The Chainalysis report identified Saudi Arabia as the third-largest crypto market in all of MENA, and UAE is the fifth. These Arab states have deep ties to the global crypto markets. For instance, Dubai has become a hub for crypto firms that serve customers all across Asia and Africa, not just in the Middle East.
According to the report, Afghanistan, one of the former MENA leaders in grassroots crypto adoption, is currently experiencing a major downturn. In Chainalysis’ 2021 crypto adoption index, Afghanistan was number 20 on the list. But since the Taliban’s takeover of the regime last August, the country has fallen to the bottom of this year’s list. Under the Taliban’s rule, cryptocurrency is equated to gambling and declared haram. And so far, several crypto dealers have been arrested in the country.
Last month, Chainalysis published a similar report showing that despite the global cryptocurrency adoption slowing down due to the impacts of the crypto winter, emerging nations continued dominating the adoption index this year as they did the year before.
Emerging markets have appeared to be on top in terms of adoption as they surpass high-income nations. According to the report, the top ten nations with the highest crypto adoption across the world are (1) Vietnam, (2) the Philippines, (3) Ukraine, (4) India, (5) the United States, (6) Pakistan, (7) Brazil, (8) Thailand, (9) Russia, and (10) China. As can be seen in the list, the US is the only representative of high-income countries within the index. China, Russia, and Brazil are upper-middle-income countries.