Decentralized finance (DeFi), stablecoins, and altcoins have been making significant strides in the Middle East and North Africa (MENA) region, as reported by blockchain analytics firm Chainalysis. MENA has emerged as the seventh-largest crypto market globally this year, with on-chain transaction volume amounting to $338.7 billion between July 2023 and June 2024, representing 7.5% of the world's total transactions.
According to Chainalysis' latest '2024 Geography of Cryptocurrency Report,' MENA's crypto inflows primarily originate from centralized exchanges (CEXs). However, there has been a steady uptick in the adoption of decentralized platforms and DeFi applications in the region, with researchers noting the gradual traction gained by these platforms.
DeFi, in particular, holds immense promise for the region by fostering innovation and providing an alternative financial system for the unbanked and underbanked populations. The absence of intermediaries in DeFi platforms is particularly beneficial for individuals in underserved areas, contributing significantly to financial inclusion efforts.
DeFi Adoption and Financial Inclusion in MENA
While the widespread adoption of DeFi is still in its nascent stages in the MENA region, the numerous benefits it offers, such as access to savings, loans, and investment tools, could drive future financial inclusion initiatives. Individuals gain the flexibility to leverage decentralized financial services without the need for traditional banking infrastructure.
Notably, countries like Saudi Arabia and the UAE have shown a keen interest in decentralized platforms, with the UAE surpassing global averages in DeFi adoption. Regulatory innovations, institutional involvement, and an expanding market ecosystem have fueled rapid growth in the UAE's crypto sector, making it one of MENA's top crypto economies.
The UAE recorded over $30 billion in crypto transactions between July 2023 and June 2024, positioning it as MENA's third-largest crypto market and among the top 40 globally. DeFi services in the UAE witnessed a 74% increase in total value, with decentralized exchanges experiencing an 87% surge in transaction volume.
The regulatory advancements implemented in key MENA markets in 2024 are expected to shape the landscape of DeFi and centralized exchanges (CEXs), influencing the broader adoption of DeFi and its impact on financial inclusion efforts in the region.
Stablecoins and Altcoins Gain Traction in MENA
Stablecoins and altcoins are gradually garnering market share in MENA, challenging the dominance of traditional assets like bitcoin (BTC) and ethereum (ETH). Countries like Türkiye, Saudi Arabia, and the UAE have witnessed a notable increase in stablecoin volume.
In the UAE, the adoption of stablecoins as an on-ramp to broader crypto services and trading reflects their popularity, especially considering the Emirati dirham is pegged to the US dollar. Türkiye, on the other hand, has seen a surge in retail users relying on stablecoins due to economic uncertainties and high inflation, seeking stable stores of value.
Stablecoins and altcoins have provided individuals in MENA with a means to hedge against currency devaluation and pursue higher returns in the volatile economic climate of the region. Türkiye leads in stablecoin trading volume relative to its GDP, underscoring the growing significance of stablecoins in the country's crypto ecosystem.
Furthermore, Saudi Arabia has demonstrated a strong interest in altcoins, surpassing global averages and indicating a higher risk appetite for non-mainstream assets. While the use of ETH in the region remains relatively stable, it falls below global averages, with Türkiye leading engagement with the ethereum network.
