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Saudi’s crypto economy shrugs off regional decline

Mohammed Al Jadaan, Saudi minister of finance. The kingdom has appointed an executive specifically to lead its virtual assets and digital currency programme Reuters
Saudi Arabia’s annual budgets stem from “very conservative” oil revenue estimates, said finance minister Mohammed Al-Jadaan
  • Saudi Arabia showing growth
  • Central bank changed approach
  • Most Middle East nations record slump

Saudi Arabia was one of only six countries in which the volume of cryptocurrency deals grew over the last year, according to a new report.

The majority of its Middle East neighbours recorded double-digit declines.

The kingdom’s crypto economy grew by 12 percent between July 2022 and July this year, as per the 2023 Geography of Cryptocurrency Report by US-based blockchain data platform Chainalysis.

This contrasts with widespread decreases in the region: 17 percent in the UAE, 26 percent in Qatar, 49 percent in Oman, 55 percent in Jordan and 96 percent in Lebanon.

The Riyadh government has generally been suspicious of cryptocurrencies.

In 2018 the Saudi Arabian Monetary Authority issued a warning against trading in them due to “their negative consequences and high risks on the traders as they are out of government supervision”.

But in September last year the regulator appointed an executive specifically to lead its virtual assets and central bank digital currency programme, signalling a change in the state’s approach to cryptocurrencies.

The UAE has been more forthcoming in welcoming cryptocurrencies into the mainstream, promoting itself as a crypto hub.

In 2018, the Abu Dhabi Global Market set up the world’s first regulatory framework for crypto and Dubai established its own Virtual Asset Regulatory Authority in 2022, which works towards similar goals.

And yet, according to the Chainalysis data, retail investments (up to $10,000) accounted for just 4.63 percent of crypto transfers in the UAE.

The majority (67 percent) of cryptocurrency transactions in the UAE were for institutional investors (over $1 million), followed by transfers for professional investments ($10,000 to $1 million).

Overall, the Middle East and North Africa region had the sixth-largest crypto economy in the world out of eight measured, with an estimated $389.8 billion in on-chain value.

This represented almost 7.2 percent of global transaction volume during the period of analysis.

The region is home to three of the top 30 countries in the index: Turkey (12), Morocco (20) and Iran (28).

Turkey is also fourth worldwide in terms of crypto value, receiving approximately $170 billion over the last year and placing it behind only the US, India and the UK.

“Turkish users appear to be turning to crypto to counter currency devaluation and preserve their savings,” the report said.

Since June, the central bank has hiked its key interest rate by 1,650 basis points while the government has begun rolling back some of the unorthodox rules and regulations that had left credit and foreign exchange markets under extensive state control.

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