Mixed Reactions to Rise in Cryptocurrency Use Across the Middle East

Bitcoin - Middle East

Since the listing of the Bitcoin Fund on the Dubai Nasdaq Exchange in June – considered the first cryptocurrency listing in the Middle East – the adoption of blockchain technology and cryptocurrency has continued to rise in the region, with Dubai expected to have more than 1,000 cryptocurrency businesses by 2022, per the U.K.-based Nickel Digital Asset Management firm.

Last week, the leading provider of enterprise blockchain and crypto solutions for cross-border payments, Ripple, announced the launch of a new platform in the Middle East, On-Demand Liquidity (ODL), in partnership with the Dubai-based, blockchain-based financial services technology company, Pyypl.

“MENA [Middle East and North Africa] continues to be a critical region for Ripple, thanks to our outstanding roster of customers, a welcoming regulatory environment and a regional focus on the needed improvements in the current financial system,” Brooks Entwistle, managing director of RippleNet in APAC and MENA, said in a statement.

The new service will enable financial institutions (FIs) and small and medium-sized businesses (SMBs) using ODL to access untapped capital to grow and scale.

In another sign of growing cryptocurrency interest in the region, Dubai-based cryptocurrency exchange BitOasis announced that it had raised $30 million in a Series B funding round last month, co-led by Chicago-based VC firm Jump Capital.

“Our aim is to build the largest and most trusted cryptocurrency platform in the region,” CEO and Co-founder Ola Doudin said in a blog post on the company’s website, adding that “it further speaks to the state of interest in the MENA region’s growing crypto ecosystem, with global investors and venture capital heavyweights backing the region’s home-grown businesses.”

Experts in the region are also chiming in with support for digital currencies, which they say can help boost Islamic finance.

According to UAE-based media firm Zawya, Ayman Sejiny, the chief executive of the Islamic Corporation for the Development of the Private Sector (ICD), said blockchain and cryptocurrency could promote financial inclusion and the development of Islamic finance industry.

And as the region begins to open up to these decentralized payment systems, regulators are not far behind, putting in measures to govern its use.

Dubai’s Financial Services Agency recently announced rules for “investment tokens,” including securities and derivatives, targeted at firms planning to issue or trade investment tokens in the Dubai International Financial Centre, as well as accredited firms intending to offer investment token-related financial services.

For Saudi Arabia’s central bank (SAMA), however, the virtual currencies spell trouble. According to an Arab News report, the bank’s Governor Fahad Al-Mubarak recently said that adopting crypto assets was not in the cards because of links to “criminals” and illicit activities, smashing any hopes of a central bank digital currency (CBDC) in the near future.

The report also cited Hussain Abdulla, co-CEO of Qatar-based investment bank QInvest, who said that digital currencies were not yet fully understood or Sharia-compliant in order to be adopted.