The growth of cryptocurrency activity varies across countries, especially when looking at different transaction size categories. However, the United Arab Emirates (UAE) stands out with balanced growth across all transaction sizes, signaling a comprehensive adoption of cryptocurrency. This was highlighted in a recent report by Chainalysis, a blockchain analysis firm, which provides insights into how the UAE is emerging as a global leader in the crypto space.
UAE’s Crypto Surge Driven by Regulation and Innovation
According to the Chainalysis report, the UAE received more than $30 billion in cryptocurrency transactions between July 2023 and June 2024, placing the country in the top 40 crypto markets worldwide. This rapid growth is attributed to a mix of factors such as regulatory advancements, increasing interest from financial institutions, and expanding market opportunities.
The report noted substantial growth in crypto activity from both small and large retail investors. Transactions involving amounts less than $1,000 and those between $1,000 and $10,000 surged by over 75% compared to the previous year. In addition, institutional investors, dealing with transaction sizes between $1 million and $10 million, also contributed to this expansion, with their activity growing by over 50%.
Diversified and Rapid Crypto Ecosystem Growth
The UAE is now the third-largest crypto market in the Middle East and North Africa (MENA) region. However, what makes the UAE unique is the diversity within its crypto ecosystem. While other countries in the region mainly rely on centralized exchanges for crypto transactions, the UAE has embraced decentralized finance (DeFi) at a higher rate than the global average. While globally, 27.8% of crypto transactions occur on decentralized exchanges (DEXs), in the UAE, the figure is 32.4%, making it the leader in the MENA region for DeFi adoption.
The total value of crypto received via DeFi platforms in the UAE has grown by 74% over the past year. Tokens traded on DEXs have also jumped significantly, increasing by 87%, from $6 billion to $11.3 billion. This surge in activity is further supported by the influx of blockchain and cryptocurrency firms that have established their presence in the UAE, including companies like Chainalysis and Bybit.
Regulatory Support Boosts Crypto Adoption
The UAE’s regulatory landscape has been a key driver of its growing crypto ecosystem. Authorities have worked to create a balance between fostering innovation and ensuring investor protection. The Securities and Commodities Authority (SCA) oversees crypto services, while the Central Bank manages the regulation of payment tokens.
In addition, Dubai’s Virtual Assets Regulatory Authority (VARA), established in 2022, has played a crucial role in attracting crypto businesses to the UAE. Dubai’s regulatory framework has been praised globally and serves as a model for other jurisdictions in the country. Deepa Raja Carbon, managing director of VARA, mentioned that Dubai is now home to over 1,000 crypto-related entities, with many of them expected to receive licenses in the near future.
With a supportive regulatory environment, increasing institutional interest, and a diverse crypto ecosystem, the UAE is positioning itself as a global hub for cryptocurrency and blockchain innovation.