The majority of cryptocurrency transactions in the United Arab Emirates (UAE) exceed $1 million, according to the latest findings from blockchain data platform Chainalysis. In its fourth annual ‘Geography of Cryptocurrency’ report, Chainalysis reveals that 67% of all cryptocurrency transactions in the UAE were for institutional investments, highlighting the growing adoption of digital assets by large organizations and high-net-worth individuals in the region.
Institutional Dominance in UAE Crypto Market
Chainalysis categorized the transactions into three main groups: institutional investments (over $1 million), professional investments ($10,000 to $1 million), and retail investments (under $10,000). The report shows that institutional-sized transactions dominate the UAE’s crypto landscape, with professional transactions following closely. Retail transactions made up only 4.63% of the total cryptocurrency transfers.
Kim Grauer, Director of Research at Chainalysis, commented, “The large proportion of institutional and professional crypto investments in the UAE reflects the confidence of high-net-worth individuals and organizations in adding cryptocurrency to their portfolios.”
This trend is seen as a direct result of the UAE’s commitment to establishing itself as a global hub for cryptocurrencies, driven by clear regulatory frameworks that have helped foster innovation while ensuring consumer protection.
Decentralized Finance (DeFi) on the Rise in UAE
The UAE is also setting itself apart from other countries in the MENA region by favoring decentralized exchanges (DEXs) over centralized ones. According to the report, 48% of the nation’s crypto activity happens on decentralized platforms, compared to 46% on centralized exchanges. This rise in decentralized finance (DeFi) signals the success of UAE’s innovation-friendly policies, which encourage the growth of blockchain platforms while maintaining necessary oversight.
UAE’s Retained Interest in NFTs
Despite the global decline in the hype surrounding non-fungible tokens (NFTs), the UAE has maintained significant interest in this sector. Between July 2022 and June 2023, the number of web traffic visits to NFT-related sites in the UAE exceeded 4 million. This sustained interest presents opportunities for businesses to explore practical applications for NFTs beyond the initial excitement, such as in real estate, event ticketing, and gaming.
“This retained interest in NFTs opens doors for businesses to create new use cases and enhance consumer experiences across industries like real estate and entertainment,” Grauer explained.
UAE Crypto Market’s Stability Despite Global Downturn
While the UAE experienced a 17% drop in the overall crypto value received, which amounted to over $34.9 billion, the country’s market outperformed many of its regional peers. Countries like Qatar (26% decline), Oman (49% decline), Jordan (55% decline), and Lebanon (96% decline) saw far greater decreases during the same period.
Saudi Arabia’s Surprising Crypto Growth
Notably, Saudi Arabia defied regional trends, registering a 12% year-over-year growth in cryptocurrency transactions, despite the country’s quasi-legal status for digital assets. According to Abdulmajed Alhamzah, the country general manager for Saudi Arabia at Rain, retail investors are driving this growth by diversifying their portfolios with cryptocurrency, viewing it as an asset class with the potential for long-term gains.
“The growth in Saudi Arabia’s crypto market is a result of increased interest from retail investors looking to broaden their investment strategies and engage with cryptocurrency early, similar to how many engaged with the internet in its early stages,” Alhamzah said.
With regulatory authorities in both the UAE and Saudi Arabia working hard to implement frameworks that foster innovation and safeguard investor interests, the future of cryptocurrency in the region looks promising.
