In most countries, the rate at which crypto activity grows varies significantly across transaction sizes. However, the United Arab Emirates (UAE) is an outlier with growth across all borders, indicating a “balanced and inclusive adoption landscape,” according to a recent Chainalysis study. report.
Chainalysis highlighted that the UAE received more than $30 billion in crypto between July 2023 and June 2024, putting it in the top 40 globally. It added that this growth is driven by a combination of factors, including regulatory innovation, institutional interest and growing market activity.
Crypto received through small and large retail investor activities, with transaction sizes of less than $1,000 and between $1,000 and $10,000 respectively, increased by more than 75% year-on-year.
Meanwhile, the value received through institutional investor activity – deal sizes between $1 million and $10 million – increased by more than 50% annually.
Fast but diversified growth
The UAE is the third largest crypto economy in the MENA region. However, the crypto ecosystem is more diversified than other countries in the region, where crypto transactions mainly take place through centralized exchanges.
DeFi adoption in the UAE is higher than the global average, with a significant portion of transactions taking place through decentralized exchanges (DEXs). Globally, 27.8% of crypto transactions take place via DEXs, while in the UAE this percentage stands at 32.4% – the highest in MENA.
The total value of crypto received through DeFi services in the UAE grew by 74% compared to last year, while tokens received through DEXs increased by 87% from approximately $6 billion to $11.3 billion.
Crypto activity in the UAE has also escalated since it started attracting blockchain and crypto companies. Many companies, including Chainalysis and Bybit, have established their headquarters in the UAE, while others, such as Crypto.com, have set up regional bases in the country.
Arushi Goel, Head of Policy for the Middle East and Africa (MENA) at Chainalysis, said:
“Traditional financial institutions such as banks are actively exploring their role within the crypto ecosystem, demonstrating the growth of a crypto-TradFi nexus. This commitment is further supported by a robust and evolving regulatory framework.”
Regulatory landscape
Regulators in the UAE have aimed to balance crypto innovation with investor protection. In the UAE, the Securities and Commodities Authority (SCA) regulates crypto services, while the central bank oversees payment token services.
The establishment of Dubai’s Virtual Assets Regulatory Authority (VARA) in 2022 has played a crucial role in attracting crypto companies and talent to the country. Dubai’s regulatory framework has been in the global spotlight and has set a precedent for other jurisdictions within the UAE.
Deepa Raja Carbon, Managing Director and Vice Chairman of VARA, told Goel:
“We have identified more than a thousand entities conducting crypto-related activities in Dubai, and we are working on a legacy transition. We expect these entities to be licensed in the coming year.”