Crypto in MENA & Investors’ Eagerness to Invest | Investera | Investment Portfolio Management Platform

Crypto in MENA & Investors’ Eagerness to Invest

05October, 2022

Just a decade ago, most people had no clue as to what cryptocurrency was, and for the average internet user, concepts like blockchain and Initial Coin Offerings (ICO) were outlandish. Even five years ago, only a small number of technology enthusiasts and early crypto users were aware of the existence of cryptocurrency, and many of them regarded it as just another hoax or a passing trend.

All of this changed when Bitcoin’s value skyrocketed, starting at $0.0008 in 2010 and reaching almost $70,000 within a decade in 2021. Bitcoin’s astronomical growth paved the way for -various alternate coins, or altcoins, that are in the market now. Bitcoin‘s astronomical growth in such a short time initiated the trend of cryptocurrency and brought several other projects, such as Ethereum, into prominence. 

This was enough motivation for early adopters to increase their investments in crypto and grasp the attention of entrepreneurs and businesses. Though a few people might still be unaware of how cryptocurrencies operate, it is undeniable that they have entered mainstream markets. Since then, cryptocurrency has gained substantial popularity and opened up various possibilities and applications across several industries. It is a particularly appealing alternative now because of the plethora of advantages it offers to individuals as well as businesses.  Although many early investors lost money just as quickly, many have made millions overnight and are still on the lookout for the next cryptocurrency to invest in.

Advantages Of Investing In Cryptocurrency

With today’s economic uncertainty, cryptocurrency is quickly becoming an alternative currency for finances and investments. Contrary to fiat currencies, which governments control, cryptocurrencies are secure and safe as they are decentralized, keeping the currency monopoly free. As a result, no one can control the flow or value of the coin.

Investing in cryptocurrency brings forth several benefits, as it is secure and private, has high equity potential, and has various applications and usability. It allows investors to diversify their portfolios with an investment that can be useful for daily tasks such as paying for goods and services. 

Cryptocurrency also provides investors with the unique opportunity to expand their basket of investments beyond bonds and stocks. The long-term growth potential sparks the interest of the enthusiastic consumer base, particularly for retirement portfolios.

International Investments in Cryptocurrency & Blockchain

A study by crypto intelligence platform Blockdata found that between 2021 and 2022, over 40 international companies poured approximately $6 billion into blockchain and cryptocurrency-related investments. US-based tech giant, Alphabet, took the lead and injected a total of over $1.5 billion into four blockchain companies, namely Fireblocks, Dapper Labs, Voltage, and Digital Currency Group. The investments were made mainly through Alphabet‘s subsidiary companies CapitalG and Google Ventures (GV). When it comes to the count of investments, Google Ventures (GV) has made a total of 990, followed by Gradient Ventures with a total of 158, and CapitalG with 106 investments. 

Cryptocurrency in MENA

Cryptocurrency has been gaining traction in the Middle East, particularly in Bahrain, UAE, and Saudi Arabia. As of 2022, over 3 million Saudi investors have invested in cryptocurrency, and over half of them believe digital currencies to be the future of finance.

Bahrain has banking regulations set in place for cryptocurrency, allowing regional crypto companies to be established in the country. The Central Bank of Bahrain (CBB) has been one of the Middle East’s early adopters in the cryptocurrency space in response to the rising demand for digital assets. The CBB authorizes banks to collaborate with exchanges by accepting cryptocurrency as an official form of payment so that consumers can easily make transactions.

In addition, Bahrain has recently approved the leading crypto trading platform, Binance, to become a fully regulated, centralized crypto exchange in the country. To empower investors in the MENA region, sharia-compliant and CBB licensed and regulated, digital asset exchange platform CoinMENA aims to be the most trusted crypto platform in the region. 

Bahrain is home to more than CoinMENA. With a trading volume of over $1 billion in the first half of 2021, Rain, one of the top cryptocurrency platforms in the Middle East, is also situated in Bahrain and is licensed by the CBB.

Apart from Bahrain, the UAE has also stood at the forefront of encouraging crypto-related activities in the region. For instance, the leading cryptocurrency exchange in the world, Binance, and FTX Europe obtained licenses to trade digital assets in Dubai. Similarly, Bybit, a cryptocurrency exchange, has also secured authorization to operate in Dubai and intends to establish its worldwide headquarters in the emirate.

Moreover, MENA’s earliest and largest crypto exchange platform, BitOasis, was also established in UAE in 2015, and quickly rose to prominence as a regional leader. BitOasis allows its users to trade several cryptocurrencies and is growing its clientele in the region. In addition, in March 2022, Singapore-based, a cryptocurrency exchange platform, announced its plans to establish its regional headquarters in the UAE.

In Dubai, covering both mainland and free zones, with the exception of DIFC, the Virtual Asset Regulatory Authority (Vara) is the sole custodian body tasked with licensing and overseeing the cryptocurrency industry. To protect investors, Dubai has set detailed policies to control emerging technologies such as cryptocurrency. Furthermore, to promote cryptocurrency-related activities, Dubai Multi Commodities Centre (DMCC), a free zone focused on finance, trading, and commodities is offering 0% taxes and accessible visa processes.

In 2021, Dubai hosted Middle East’s largest crypto event, with over 80 speakers and 64 startups contributing to the conference. With more than 8000 attendees, this event was a massive success. In 2022, Dubai hosted another successful cryptocurrency event, which served as a powerhouse of crypto knowledge for new investors, who are now exhibiting a strong interest in crypto trading and investments. This event was also a huge success thanks to the 100+ crypto companies and 10,000+ investors who participated.

With the help of cryptocurrency, business owners can quickly, effectively, and affordably obtain financing. Entrepreneurs can benefit from the quick and efficient transactions enabled by blockchain technology, as well as gain the opportunity to invest early in high-growth tech companies. Though cryptocurrency is one of the most volatile currencies to exist, for many startups, investors, and businesses, it has brought forward a once-in-a-lifetime opportunity and a gateway to access some of the most revolutionary and intriguing technologies in the world. 

In the coming years, crypto startups will continue to emerge and scale, thereby driving attractive investment opportunities for investors who like to bet on emerging fintech trends. One has to wait and watch how the startup ecosystem is going to shape itself for crypto domain and whether it will continue to attract investors. 

Sania Shah