While interest in digital assets has waned in some parts of the world, in the Middle East and North Africa, cryptocurrency adoption has skyrocketed, according to Mustafa Kheriba, chief executive of asset management firm Iceberg Capital Limited. . According to Kheriba, factors such as high inflation and the desire of residents for high-yield investment opportunities have drawn many towards cryptocurrencies.
The many benefits of Blockchain
Despite the bearish conditions that persisted through much of 2022, according to Mustafa Kheriba, the chief executive of Iceberg Capital Limited, interest and adoption of crypto and blockchain have not dissipated. To back up this claim, Kheriba pointed to the 23rd Developer State report which suggests that more experienced software developers are more likely to be working on blockchain projects.
However the Iceberg Capital Limited The chief executive told Bitcoin.com News that interest has risen particularly in the Middle East and North Africa (MENA) region, where some regulators have taken the lead in establishing or proposing to create frameworks to regulate crypto assets.
In addition, Kheriba said that factors such as inflation or the depreciation of national currencies have influenced the increase in the number of citizens who have adopted cryptocurrencies. On the other hand, for residents of more prosperous countries, cryptocurrencies are increasingly seen as an investment opportunity.
In the rest of his written responses sent to Bitcoin.com News via Whatsapp, Kheriba also shared his thoughts on the future of the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
Below are the rest of Kheriba’s responses to submitted questions.
Bitcoin.com News (BCN): Why is cryptocurrency adoption skyrocketing in the MENA region and would you say users are being pushed towards cryptocurrency by external forces or attracted to cryptocurrency?
Mustafa Kheriba (MK): Momentum within the MENA region has been building for quite some time, thanks to multiple reasons. There are country-specific factors at play. Inflation in countries like Egypt and Turkey is pushing people towards cryptocurrencies as a store of value and protection against fiat currency devaluation. This is particularly relevant in countries where the government’s monetary policy is unpredictable and cannot be relied on for stability.
On the other hand, in the Gulf countries, rapidly evolving regulatory frameworks, financial institutions, banks, and high net worth individuals (HNWIs) are embracing cryptocurrencies as an investment opportunity. The blockchain technology behind cryptocurrencies has many benefits, including decentralized finance (Defi) over traditional finance (Tradfi), which are becoming increasingly apparent to banking and finance professionals in the region.
Furthermore, the convenience and profitability of cross-border remittances are attracting people towards cryptocurrencies. In a region where cross-border payments can be expensive, slow, and often opaque, cryptocurrencies provide a faster, easier, and cheaper alternative. This is particularly relevant for migrant workers looking for ways to send money back to their families.
In general, it is a combination of external factors and the unique characteristics of cryptocurrencies that is driving the skyrocketing adoption of cryptocurrencies in the MENA region. As the regulatory environment continues to evolve and more people realize the benefits of cryptocurrencies, we can expect to see even more growth in the region’s cryptocurrency market in the coming years.
BCN: How do the main drivers of cryptocurrency adoption in the MENA region differ from those in the rest of the world?
MK: One of the main differences is the regulatory environment. While the rest of the world is still figuring out how to regulate cryptocurrencies, the United Arab Emirates and other Gulf countries have been focused on creating a regulatory framework that encourages market development while adhering to AML (Anti-Money Laundering) guidelines. ). This has created a secure environment for financial institutions, banks, and businesses to adopt blockchain technology.
Another factor driving cryptocurrency adoption in the MENA region is the emphasis on secure cross-border remittances. The region has a large migrant population and traditional cross-border payments can be expensive and slow. Crypto remittances offer a faster, easier, and cheaper alternative, making them a popular option in the region.
Furthermore, the United Arab Emirates and specifically the ADGM (Abu Dhabi Global Market) in Abu Dhabi, has become a global crypto hub with strong links to international markets. This has attracted not only retail clients, but also large institutions and companies to adopt cryptocurrencies.
BCN: Do you think cryptocurrency-based remittances could one day replace the Society for Worldwide Interbank Financial Telecommunication (SWIFT)?
MK: In fact, crypto remittances have been affecting SWIFT’s dominance, and countries within the MENA region have become increasingly reliant on cryptocurrencies, especially stablecoins, for remittances. The fact that Egypt’s national bank is already building a crypto remittance corridor between Egypt and the United Arab Emirates, where a large number of Egyptians work, highlights the growing strength of cryptocurrency in remittances.
SWIFT, the current interbank messaging system for cross-border payments, is certainly inefficient today. Stablecoins and crypto technology can make cross-border payments seamless, efficient, and fast. They solve problems, at least for remittances, that SWIFT should have solved more than a decade ago.
Will cryptocurrencies completely replace SWIFT as the preferred mode for remittances? That is unlikely, especially considering that SWIFT’s operations continue to evolve. Although their innovations have not been able to keep up with user expectations, they have historically introduced enough innovation to prevent alternatives from posing a serious challenge. As more people become aware of the benefits of cryptocurrency-based remittances and technology continues to evolve, we can expect to see further adoption and integration of cryptocurrencies into the global financial system. This could eventually lead to cryptocurrency-based remittances becoming the preferred mode of cross-border payments.
BCN: How, if at all, are ADGM and organizations like the Middle East, Africa and Asia Blockchain and Cryptocurrency Association (MEAACBA) helping to accelerate the adoption of blockchain technology?
MK: The very fact that we launched our Venom Ventures Fund (VVF) out of ADGM says a lot about the critical role that ADGM plays not only for the blockchain industry, but also for the financial services sector in general. ADGM has become the jurisdiction of choice for cryptocurrency investors and builders in the region. Its proactive regulatory regime allows all participants to collaborate and innovate.
Since the Middle East, Africa and Asia Crypto & Blockchain Association (MEAACBA) is headquartered in ADGM, MEAACBA has the potential to help accelerate the development of the (region’s) blockchain ecosystem by providing its members with a coordination mechanism. between government agencies, regulators, banks, legal, tax and advisory firms.
BCN: Can you discuss how rapidly evolving regulations in the region are likely to affect blockchain adoption?
MK: Historically, regulations have always lagged far behind innovation. Fortunately, that is not the case in the United Arab Emirates, where regulatory initiatives have been conducive to innovation and continue to evolve. A balanced regulatory framework is needed to ensure that the crypto space is secure for large institutions, traditional business firms, developers, and users alike. The regulations will bring legitimacy to the blockchain industry and help institutions adopt cryptocurrencies at a faster rate than ever before.
What are your thoughts about this interview? Let us know what you think in the comments section below.
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