Introduction
Blockchain and related concepts, ever since their conception, have had an incredible impact on the world. Industries and world affairs found wanting have been dismantled and reassembled by blockchain-based solutions. Although several eyebrows have been raised in the MENA region about blockchain and cryptocurrencies, it is increasingly gaining popularity, nevertheless. The state of crypto and blockchain in the MENA region is showing an upwards trends. It is evident from recent events and funding that support some of the cryptocurrency-based companies in the region.
While a previous article discusses the magic of DeFi and blockchain in general, this series of articles titled; the state of crypto and blockchain in MENA region would focus on a monthly report of the events. This article particularly represents the first of many monthly articles that would update readers about the monthly state of crypto and blockchain in the MENA region. It would explore funding, restrictions, and report findings as blockchain and its associated concepts gain traction in the MENA region.
Read about the fundamentals of DeFi here
The current state of cryptocurrency in the MENA region
Apart from the United Arab Emirates (UAE) and Bahrain, other countries in the MENA region do not seem to have clear regulations on cryptocurrency. Bahrain published a regulatory module governing crypto assets in 2019, and UAE also issued a layout on rules to be followed while carrying out crypto-related transactions. This has led to increased activity in those regions. For instance, the Dubai World Trade Center (DWTC) approved creating a zone to regulate and license virtual assets (cryptocurrency inclusive). Bahrain is also known to host some of the top crypto exchanges, including Binance (ranked number one according to Coinmarketcap).
This does not leave a dormant blockchain or cryptocurrency zone in other parts of the MENA region. Several start-ups created, including BTCTurks, ZPAYae, BITOasis, HAYVN, Drife, and Tranche Finance, also serve these regions. Reports also show that Egyptians have piqued interest in cryptocurrency as they experienced devaluation in their currency. Saudi Arabia’s Central Bank also has a digital currency, Aber, with which they plan to improve cross-border bank transactions with other countries. However, investors in most of the MENA region are not confident in the legality of their ventures.
The growth rate so far is a fruition of the fact that blockchain technology has had a tremendous impact on various industrial sectors, including health, education, supply chain, social media, finance, etc. This has further plunged the governments and several sector leaders in the MENA region into actively studying blockchain technology. This study has led to increased acceptance, funding of cryptocurrency companies (both existent and start-up), and policy changes to accommodate this new technology further.
In this light, let us consider a few notable events for blockchain-related technologies in January 2022.
A highlight of blockchain-related events in January 2022
Crypto-Company funding
On January 18, 2022, Rain, a Bahrain-based cryptocurrency company, raised $110 million in its series B funding. This came after a series A funding of $6 million in January 2021. This round was co-led by Paradigm and Kleiner Perkins with participation from Coinbase Ventures, Cadenza Ventures, Global Founders Capital, JIMCO, MEVP, and CMT Digital.
Rain happens to be one of the most reputable crypto exchanges in the Middle East. It is Sharia-compliant and provides its services to major financial cities like Bahrain, Kuwait, Saudi Arabia, and the UAE. Rain boasts over 185,000 active users who have cumulatively transacted over $1.9 billion. Rain also has about 400 staff members currently.
Rain plans to use this funding to expand its reach in the MENA region and beyond, including Turkey and Pakistan. They also plan to double their staff strength by the end of 2022.
This strikes a positive note for the blockchain community in the MENA region, as we would expect increased participation in crypto-related activities in the region.
EU License Acquisition
In a bid to further expand its service offering and relations both with regional banks and global banks, CoinMENA was given a license by the European Union in January 2022.
CoinMENA, founded by Talal Tabbaa, Dina Sam’an, and Yazan, is a Bahrain-based crypto exchange platform serving Bahrain, Saudi Arabia, Kuwait, and Oman. It is licensed by the Bahrain Bank and offers a wide range of assets, customer service, and an easy-to-use mobile app. CoinMENA is backed by BECO Capital, Arab Bank, Bunat Ventures, and Alameda Research. Its last funding occurred in September 2021, when it raised $9.5 million in that round.
As obtained by CoinMENA, this license would further expand their service offering and improve banking relationships with regional and global banks. They also plan to build additional financial services on web3.0 and crypto rails.
Future projections
Presently, the MENA region is missing out on some blockchain-based opportunities. It is important to know that the restrictions are mainly for three reasons:
Several countries in the Middle East and North Africa (MENA) region have openly stated that they are still trying to understand blockchain technology and benefit it. This results in its outright rejection or acknowledgment by several regional governments, like Iran, Egypt, Turkey, etc.
Religious issues bordering on Sharia compliance have been why blockchain technology and cryptocurrency have not gained widespread acceptance in the MENA region.
Another reason some governments want to regulate cryptocurrency and its use in the MENA region is to prevent it from funding terrorism. To this end, until they understand its terms of usage and adequately regulate it, they will not fully accept blockchain technology.
Knowing these core restrictions allows us to consider reasons for a more palatable space for blockchain technology in the region. Some countries have begun to understand the reach of blockchain and how it would immensely benefit them in terms of financial inclusivity, global relations, and technological ease.
Considering the reasons for the restrictions in the region, what can be done to change the scene?
Blockchain-based companies, especially those currently in the region, can invest in spreading knowledge about the benefits of blockchain and its associated technology for the region. This would help prove a better understanding that would enable every country within the region to decide on regulatory policies. With that, the expectation is that investors will flood into the MENA region to improve the lives of its citizens using blockchain technology.
Conclusion
Despite the restrictions, the blockchain industry grows steadily within the MENA region. January 2022 saw funding for Rain, a Bahrain-based cryptocurrency company, and another Bahrain-based company, CoinMENA, got its license to operate in the EU. These audacious moves by these crypto-giants are all aimed at expansion, which would benefit the MENA region. Suffice it to say, with increased knowledge of the benefits of blockchain technology in the MENA region. Blockchain growth will exponentially increase in 2022.