Chainalysis, the blockchain data platform, has revealed that the UAE’s small population, when compared to other countries in the Middle East and North Africa (MENA) region, has not prevented it from becoming one of the front-running crypto economies.
Receiving £34billion in cryptocurrencies between July 2023 and June 2024, the UAE has experienced 42 per cent year-on-year growth. According to the Chainalysis Geography of Crypto Report, this is much higher than than average of the MENA region: 11.73 per cent.
In the UAE, small retail (<$1,000) and large retail ($1,000-$10,000) crypto transactions each increased by over 80 per cent. The number of professional ($10,000-$1million) and institutional ($1million-$10million) sized transfers also increased by 46.30 per cent and 55.07 per cent respectively.
This well-rounded growth across all value segments stands in contrast to the trend in the broader MENA region, where the majority of crypto activity was driven by institutional and professional-level activity. In fact, 93 per cent of value transferred consisted of transactions of $10,000 or above. This suggests that a broader demographic in the UAE utilises cryptocurrencies, indicating a high degree of market maturity.
Eric Jardine, cybercrime research lead at Chainalysis
Chainalysis’ cybercrime research lead, Eric Jardine said: “The UAE continues to experience rapid growth in the crypto space, driven by a combination of regulatory innovation, institutional interest, and expanding market activity. Moreover, unlike most countries globally, the UAE’s crypto activity is growing across all transaction size brackets, signalling a more balanced and comprehensive adoption landscape.”
A diverse ecosystem
Chainalysis observed significant activity beyond centralised exchanges (CEXs), showcasing the diversity of the UAE’s crypto ecosystem. The total value received by DeFi services, including decentralised exchanges (DEXs), grew by 74 per cent compared to last year. Additionally, the value received by DEXs alone grew by 87 per cent.
“In many ways, DeFi represents the cutting edge of blockchain technology. So, this impressive growth in DeFi in the UAE further supports the reasoning that the country has an especially mature and advanced crypto ecosystem,” said Jardine.
Stablecoin preferences
Interestingly, while Bitcoin has traditionally been seen as the proxy for the crypto ecosystem as a whole, the research from Chainalysis shows that UAE investors actually have a strong preference for stablecoins.
In the country, Bitcoin accounts for just 16.5 per cent of the volume of cryptocurrencies received, while the share of stablecoins stood at just over half (51.3 per cent). As the Dirham is pegged to the US Dollar, and the most popular stablecoins are also dollar-pegged, the growing adoption of stablecoins likely reflects their popularity as an on-ramp to broader crypto services and trading.
Arushi Goel, policy lead for Middle East and Africa at Chainalysis
Arushi Goel, policy lead for Middle East and Africa at Chainalysis noted: “As our latest research shows, stablecoins are already the preferred crypto asset. With the clarity provided by the Central Bank of the UAE, we can expect further utilisation as consumers will likely soon benefit from the offerings of regulated players who innovate responsibly.
“With the UAE’s forward-focused regulation, larger players such as banks and major financial institutions will find it easier to integrate and accept stablecoins as part of their payment systems, fostering a more seamless financial system.”
While the growing popularity of stablecoins bodes well for the UAE market, it is worth noting that Bitcoin did outperform all other crypto assets in year-on-year growth in the UAE, posting an over 100 per cent increase in volume of transactions. By comparison, altcoins grew by over 75 per cent and stablecoins 22.46 per cent. The transaction volume for Ethereum (ETH), which accounted for 7.8 per cent of the volume of cryptocurrencies received by the UAE, grew by 20.31 per cent.
Reflecting on success and looking to the future
“2024 was a big year for Bitcoin as in January, the US SEC approved the launch of several BTC Exchange-Traded Funds (ETFs). Institutional investment is already a major driver of crypto market momentum in the UAE, and the data suggests that this announcement has also resonated well with these investors,” said Jardine.
“Looking ahead, the regulatory strides made in 2024 will be crucial in shaping the future of crypto in the UAE. As blockchain technology, tokenisation, and cryptocurrency become more integral to the global financial landscape, the UAE — which has clearly signalled its intent to be a global crypto hub — has set a strong foundation for the ecosystem and provided industry players with the clarity to operate and innovate within the market,” added Goel.
“It will be interesting to see how these industry players then build on this and advance the nation’s crypto economy.”
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