Mena crypto trade worth $338bn
Stablecoin makes up 52%
Highest adoption in Turkey
Cryptocurrency traders in the Middle East and North Africa prefer stablecoins over single crypto currencies like Bitcoin, data show.
Stablecoins made up 52 percent of all cryptocurrency transactions carried out in the Mena region in the year to June 2024, according to New York-based blockchain analysis company Chainalysis.
That is more than the 17 percent traded in Bitcoin, and higher than any other region.
Stablecoins are cryptocurrencies, the value of which is linked to other assets, such as traditional fiat currencies or commodities such as gold. A stablecoin called Tether, for example, is pegged to the value of the US dollar.
By contrast, cryptocurrencies like Bitcoin and Ether are not. Altcoins are any cryptocurrency created after Bitcoin.
Chainalysis estimates that, in the year to June 2024 – the period for which the most recent data is available – Mena crypto trades totalled $338.7 billion, meaning that stablecoins accounted for roughly $175 billion of these.
The next highest region was South and Central Asia at 48.8 percent, according to the data. The lowest region was North America, where stablecoin transactions accounted for 37.9 percent of total.
Global transfers in stablecoins hit $27.6 trillion last year.
“Stablecoins and altcoins are capturing a larger share of the market, surpassing traditionally dominant assets like BTC (Bitcoin) and ETH (Ether), particularly in Turkey, Saudi Arabia, and the UAE,” Chainalysis said in a report.
Much of the growth of stablecoins in Mena can be ascribed to volatility and depreciation in national currencies, said Dr Mohamed Damak, managing director and financial institutions sector lead at S&P Global Ratings.
Turkey’s crypto embrace can be explained by “hyperinflation in the country over the past few years and the significant depreciation of the lira”, said Damak.
According to Chainalysis, Turkey captured $137 billion of value received using stablecoins in the year to June 2024. During that same time period, the Turkish lira lost roughly 50 percent of its value.
Saudi Arabia, the UAE and Egypt follow Turkey in transaction numbers.
Like Turkey, Egypt’s stablecoin adoption was driven by currency depreciation, according to Damak. The Egyptian pound lost almost 60 percent of its value during this period.
For Saudi Arabia it was driven by the country’s relatively youthful population and their interest in this new technology, Damak said. Just under half of Saudi Arabia’s population of roughly 34 million people is under the age of 30.
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“For the UAE, this is probably related to the regulatory initiatives in the country and the fact that it wants to capture a portion of the DeFi (Decentralized Finance) and crypto activities,” said Damak.
Decentralized finance refers to an emerging peer-to-peer financial system that relies on blockchain technology to allow people, businesses, or other entities to transact directly with each other.
“Stablecoins are by no means riskless,” said Manuel Villegas, digital assets and next generation research analyst at Switzerland-based private bank Julius Baer.
In 2022 the algorithmic stablecoin TerraUSD collapsed. It was pegged to the US dollar via another cryptocurrency, LUNA, but the price of the latter plunged, wiping out $265 million in value overnight.
US crypto policy changes – which are underway following Donald Trump’s plan to build a crypto strategic reserve – are also fuelling stablecoin adoption.
“Growth of the stablecoin market is directly vinculated (linked) to the growth of the digital assets markets, and right now the stablecoin market cap (capitalisation) is actually very close to its all-time high,” said Villegas.
“As the crypto market grows, stablecoins should continue growing, in a lockstep fashion.”
