The Middle East is one of the fastest-growing crypto markets globally, processing more than $330 billion worth of crypto transactions between July 2023 and June 2024, according to a new Chainalysis report.

The surge in crypto transactions has transformed the region into the world’s seventh-largest crypto market, holding almost 7.5% of the globe’s crypto transactions.

“The region's demographics, especially its large cohort of young individuals, and the significant proportion of people without traditional bank accounts help to drive adoption for crypto,” Eric Jardine, Cybercrimes Research Lead at Chainalysis, told TheStreet Crypto.

Citizens in Turkey, Morocco, the United Arab Emirates, and Saudi Arabia have been key contributors to this massive surge. In the UAE and Saudi Arabia, decentralized finance, or DeFi, has been a major component driving adoption: “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,” Jardine told TheStreet Crypto.

“The UAE’s proactive and collaborative regulatory approach to crypto and Web3 companies has attracted a diverse range of users, and solidified the UAE as a hub for DeFi and broader crypto activity,” Jardine added.

In contrast to this, centralized exchanges, rather than DeFi, have been more popular in Qatar and Turkey, according to Jardine.

The Chainalysis report also highlights that altcoins are also growing in popularity in different regions around the world, including the Middle East. “Unsurprisingly, in Turkey, which has a long history of economic instability and high inflation, retail users’ reliance on stablecoins reflects their concerns over volatility and a need for consistent stores of value,” Jardine told TheStreet Crypto.

“In contrast, in the UAE, where the local currency is pegged to the U.S. dollar, the growing adoption of stablecoins likely reflects their popularity as an on-ramp to broader crypto services and trading.”

Stablecoins are cryptocurrencies that are pegged one-to-one to stable assets like the U.S. dollar or gold.

The favorable regulatory environment in the UAE has also encouraged stablecoin adoption and will smooth the business climate for crypto in the region. “The board of the UAE Central Bank recently approved the issuance of new regulations to oversee and license stablecoin,” Jardine said. "By offering clear regulations for using stablecoins as payment instruments, the CB UAE is creating a welcoming atmosphere for businesses to establish themselves and contribute to the growth of the crypto ecosystem. This approach mirrors the successful efforts by VARA in Dubai and the ADGM in Abu Dhabi to develop the crypto asset ecosystem. These regulations also open the door for high-quality, AED-backed stablecoins to be licensed, which will help build a strong domestic market.”