People in Saudi Arabia and the UAE are showing considerable interest in decentralised platforms (DEXs). These are platforms that don’t use an intermediary bank and use block chain and cryptocurrency. Of course, traditional banks and the central banks usually don’t like cryptocurrencies because they have a lack of control. Some might call these institutions members of the “deep state”.
What the US Fed Reserve is doing
However, the US Federal Reserve is reportedly changing with the 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 already owned by the federal government. According to reports, the United States is the largest known state holder of bitcoin in the world, 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, which is 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 towards 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.
There is no doubt, that the UAE’s proactive and collaborative regulatory approach to crypto and Web 3.0 companies has attracted a diverse range of 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 compared to 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. This accounted for 7.5 percent of the world’s total transaction volume, according to a survey carried out by Chainalysis (see the graph below).
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 more. This has given way for accelerated fintech innovation.
It’s important, therefore, that these countries, put in 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 increases, regulatory clarity can
foster innovation, provide stability for businesses and attract investors”,according to Chainalysis.
The importance of Web 5
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 for Web 5 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, which, despite the name, does not follow the yet-to-be-created Web4. The Web5 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 technology,