The majority of crypto transactions in the UAE exceed values of $1million, blockchain data platform Chainalysis has revealed in its fourth annual ‘Geography of Cryptocurrency’ report.
Overall in the UAE, 67 per cent of all cryptocurrency transactions were for institutional investments (values exceeding $1million), followed by professional investments (values between $10,000 to $1million) – while retail investments (up to $10,000) accounted for a minority (4.63 per cent) of transfers in the region, revealed Chainalysis.
Kim Grauer, director of research at Chainalysis, said: “The fact that by far the larger portion of crypto investments in the UAE is for institutional and professional-sized transactions, indicates an eagerness from organisations and high-net-worth individuals to add cryptocurrency to their investment portfolios.
“This market confidence is validation of the efforts being made by the country’s leadership to offer commendable regulatory clarity, and establish the nation as a global crypto hub.”
Across the MENA region, the UAE was also one of the only countries to see a higher share of crypto activity taking place on decentralised exchanges (48 per cent), rather than on centralised exchanges (46 per cent). The outsized popularity of decentralised finance (DeFi) in the UAE, further validates the success the country has had in passing innovation-friendly regulatory frameworks that enable crypto platforms to develop with oversight that keeps consumers safe.
NFT and crypto fares better in UAE than others in the region
The Chainalysis report also found that, between July 2022 and June 2023, the number of web traffic visits to NFT sites in the UAE exceeded 4 million – despite the fact that in most regions of the world, the hype surrounding NFTs has dramatically died down since its peak.
“This retained interest in NFTs in the UAE offers businesses the opportunity to grow past the hype and start to introduce practical use cases based on this technology. NFTs have the potential to enhance consumer experiences in the UAE through their application in a diverse range of purposes, including title deeds, music festival ticket sales, charity donations, and analysing gaming trends,” said Grauer.
Over the research period, Chainalysis also found that the crypto value received by the UAE was over $34.9billion. While this represents a 17 per cent decrease over the previous year, the country’s crypto market fared much better than many other nations in the region including Qatar (26 per cent decline), Oman (49 per cent decline), Jordan (55 per cent decline), and Lebanon (96 per cent decline).
Saudi Arabia enjoys surprise crypto growth
Interestingly, in Saudi Arabia – despite a current ‘quasi-legal’ status for cryptocurrencies – the crypto economy grew more this past year than any other country, with a year-over-year transaction volume growth of 12 per cent. In fact, Saudi Arabia was one of just six countries to see any year-over-year transaction volume growth during the time period studied.
Abdulmajed Alhamzah, country general manager for Saudi Arabia at crypto exchange Rain, explained the reason behind this trend: “Retail investors are often the largest demographic turning to crypto, seeking to diversify their portfolios.
“Many already have investments in real estate, stocks, and other assets, and they’re keen to include crypto. They recall the internet’s transformative impact and are eager to engage with crypto early on, anticipating significant growth in the coming years.
“Regulators in the region are working very hard to provide a robust regulatory framework that fuels innovation in the space but more importantly, protects customer funds, as well as safeguarding customers from potential scams.”