Decentralised platforms (DeFi) are becoming increasingly popular across the Middle East and North Africa (MENA), with the UAE positioning itself as a major crypto hub. Lucia Dore explains.
People in Saudi Arabia and the UAE are showing considerable interest in decentralised platforms (DEXs). These platforms don't use an intermediary bank and use blockchain and cryptocurrency. Of course, traditional and central banks usually don't like cryptocurrencies because they lack control. Some might call these institutions members of the "deep state."
What the US Federal Reserve is doing
However, the US Federal Reserve is reportedly changing, with President Donald Trump wanting the US to become the "crypto capital of the world." On March 6, 2025, the new government established the Strategic Bitcoin Reserve and US Digital Asset Stockpile for other cryptocurrencies.
The reserve will be capitalised with bitcoin, which the federal government already owns. According to reports, the United States is the world's largest known state holder of bitcoin, estimated to hold about 200,000 BTC, as of March 2025.
The popularity of DeFi
The majority of decentralised finance (DeFi) activity across the Middle East and Africa (MENA) occurs on DEXs, with Saudi Arabia participating in other DeFi activities at a marginally higher share than the other nations shown, according to a survey carried out by Chainalysis. Saudi Arabia is a G20 economy with a population of over 30 million and benefits from a disproportionately young population. Around 63 percent of its citizens are under 30 years old, Thomson Reuters said last May in an article. "This demographic is especially meaningful from an emerging technology perspective, as younger generations tend to be more open to experimenting with new financial technologies," Chainalysis said.
DeFi is an emerging peer-to-peer financial system that uses blockchain and cryptocurrencies to allow people, businesses, or other entities to transact directly with each other. The key principle behind DeFi is to remove third parties like banks from the financial system, thereby reducing costs and transaction times.
The UAE shows higher DeFi adoption than the global average, likely attributable to its progressive regulatory stance, which has fostered clarity around specific classes of crypto participation, says Chainalysis. The UAE has received accolades for its proactive and innovative regulatory approach to cryptocurrency regulation. Between July 2023 and June 2024, the UAE received over USD30 billion in crypto, ranking the country among the top 40 globally and making it MENA's third-largest crypto economy.
Undoubtedly, the UAE's proactive and collaborative regulatory approach to crypto and Web 3.0 companies has attracted diverse users and solidified the UAE as a hub for DeFi and broader crypto activity. In contrast, users in Türkiye and Qatar remain heavily reliant on central exchanges (these exchanges use a central bank), with lower DeFi participation than global averages.
Overall, the environment in MENA has become more conducive to cryptocurrencies in recent years. For example, MENA ranked as the seventh-largest crypto market globally in 2024, with an estimated USD338.7 billion in on-chain value received between July 2023 and June 2024. According to a survey carried out by Chainalysis (see the graph below), this accounted for 7.5 percent of the world's total transaction volume.
Saudi Arabia and Qatar
However, it's important to note that both Saudi Arabia and Qatar do not yet have a comprehensive regulatory framework in place for virtual asset service providers (VASPs) and therefore do not yet have local centralised exchange (CEXs). However, they are encouraging new developments in Qatar that allow companies to apply for a licence to become token service providers, according to Chainalysis.
The lack of regulation has not stopped Qatar's growth in this area, as its regulatory stance is evolving. Hence, Qatar is growing by 120 percent year-on-year. In September, the Qatar Financial Centre (QFC) established legal and regulatory foundations for digital assets, asset tokenisation, and trusted technology infrastructure, which will develop further. This has given way to accelerated fintech innovation.
Therefore, these countries must implement the "right" regulations, creating clarity for everyone involved. As countries like Saudi Arabia and Qatar continue to experience rapid growth in adoption, there is an opportunity for regulatory frameworks to develop. "As consumer demand and market activity increase, regulatory clarity can foster innovation, provide stability for businesses, and attract investors", according to Chainalysis.
Is Web 5 the way forward?
I have learned recently about the importance of correct and well-balanced regulation when I converted some cryptocurrency into USD. The pendulum has probably swung too far in that there are many hoops to jump to comply with regulatory control. This is an attempt by regulatory authorities to prevent fraud and criminal activities.
To stay ahead of the game, countries and companies have to embrace Web 5.0, when it comes on stream. It's a different type of technology from what has gone before. It is all about collaboration and partnerships, and enhances previous versions of the internet. It's a chance for the Middle East countries to step ahead of the game. Web5.0 comprises a network of agents that can help protect you in difficult situations, or in war-torn countries, such as Gaza.
Jack Dorsey, co-founder of the former social media platform,Twitter, is behind Web5.0, which, despite the name, does not follow the yet-to-be-created Web4.0. The Web5.0 platform, announced in June, 2022, is the crypto and decentralised finance arm of Dorsey's payments company, Block (née Square), which is based on Web3.0 technology.
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