UAE, Saudi Cash In on Crypto Activity as Global Market Cools
The UAE maintained over $34.8 billion in crypto transactions between July 2022 and June 2023, and Saudi Arabia registered 12 percent growth in crypto volumes, demonstrating the two Gulf nations’ resilience amid global market turmoil.
“Compared to the $42 billion the [UAE] received in the same period last year, this represents a 17 percent drop. It’s worth noting, however, that this decline is in line with the performance of global crypto and traditional financial markets,” Director of Research at blockchain analytics firm Chainalysis, Kim Grauer,
The UAE’s crypto market fared much better than other countries in the Middle East, including Qatar (down 26 percent), Oman (down 49 percent), Jordan (down 55 percent) and Lebanon (down 96 percent) during the same period.
Business has been cooling in the turbulent waters of the cryptocurrency markets over the past year. As valuations plunged, trading volumes slowed, and the frenzied enthusiasm that gripped investors at the peak of the bull run had seemingly subsided.
However, a new Chainalysis report revealed that the tide may be turning once more for digital assets in strategically important Gulf markets like the UAE and Saudi Arabia.
Could Saudi be the Gulf’s next rising star in crypto adoption?
While total transaction volumes experienced declines across most of the region in line with the worldwide industry downturn, the report suggests that some countries bucked the cooling trend. None more so than Saudi Arabia, which saw an estimated 12 percent year-over-year growth to become “one of just six countries” globally to increase activity.
“Cryptocurrencies have something of a ‘quasi-legal’ status in Saudi Arabia. On the face of it, the government prohibits local banks from processing crypto-related transactions and crypto trading is deemed illegal,” she explained.
“While international exchanges such as Binance and Coinbase aren’t allowed to operate in the country, regional exchanges enable Saudi residents to purchase cryptocurrencies, and the government hasn’t declared any penalties for such activities.”
However, despite the ambiguity, “there is an appetite for crypto among the nation’s residents.”
Against this backdrop, the kingdom was one of six countries observed by Chainalysis to record any year-on-year increase in transaction volume – a feat which Grauer sees as “especially impressive.”
The steadily growing interest demonstrates crypto’s rising significance for Saudi investors. Should authorities establish clear rules, it could unlock untapped potential by encouraging regulated platforms to set up operations and new innovative companies to enter the market.
A more mature framework similar to neighbours in the UAE may signal Saudi’s emergence as a crypto heavyweight in the Gulf region.
