According to Mustafa Kheriba, executive chairman of asset management firm Iceberg Capital Limited, while interest in digital assets is waning in some parts of the world, cryptocurrency adoption is surging in the Middle East and North Africa. According to Kheriba, factors such as high inflation and residents’ desire for high-return investment opportunities have drawn many to cryptocurrencies.
The many benefits of blockchain
Although bearish for most of 2022, according to Mustafa Kheriba, executive chairman of Iceberg Capital Limited,interest in and adoption of crypto and blockchain has not waned. In support of this claim, Kheriba points to the 23rd State of the Developer reportwhich states that the most experienced software developers are “most likely to work on blockchain projects.”
Nevertheless,told Bitcoin.com News that Iceberg Capital Limited executive chairman told Bitcoin.com News that interest is growing, especially in the Middle East and North Africa (MENA) region, where some regulators are looking to crypto assets are taking the lead in establishing or proposing frameworks for regulating crypto assets.
In addition, factors such as inflation and the depreciation of home currencies are contributing to the number of citizens embracing crypto, Kheriba said. Meanwhile, for residents of more affluent countries, cryptocurrencies are increasingly seen as an investment opportunity.
In the rest of his response letter sent to Bitcoin.com News via Whatsapp, Kheriba also shared his thoughts on the future of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) He also discusses his thoughts on the future of the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
Here is the rest of Kheriba’s response to the questions sent.
Bitcoin.com News (BCN). Why is crypto adoption surging in the MENA region and are users being pushed by outside forces to crypto or can you say they are being pulled by crypto?
Mustafa Keliba (MK). Momentum in the MENA region has been building for quite some time for multiple reasons. There are also country-specific factors. Inflation is rising in countries like Egypt and Turkey, and people are turning to crypto as a hedge against value preservation and fiat devaluation. This is especially relevant in countries where government monetary policy is unpredictable and cannot be relied upon for stability.
Meanwhile, in the Gulf countries, the rapidly evolving regulatory framework, financial institutions, banks, and high net worth individuals (HNWIs) are embracing crypto as an investment opportunity. The blockchain technology behind crypto has many advantages over traditional finance (Tradfi), including decentralized finance (Defi), which is becoming increasingly apparent to banks and financial professionals in the region.
In addition, the convenience and cost-effectiveness of cross-border remittances are drawing people into crypto. In a region where cross-border payments are often expensive, time-consuming, and opaque, crypto offers a faster, easier, and cheaper alternative. This is especially relevant to migrant workers looking for a way to send money to their families.
Overall, the surge in crypto adoption in the MENA region is due to a combination of external factors and the unique characteristics of crypto. As the regulatory environment continues to evolve and more people become aware of the benefits of crypto, the crypto market in the region is expected to grow further in the future.
BCN: How do the main drivers of crypto adoption in the MENA region differ from 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 crypto, the UAE and other Gulf countries have 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 corporations to adopt blockchain technology.
Another factor driving crypto 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 time consuming. Crypto remittances have become a popular choice in the region because they offer a faster, easier, and cheaper alternative.
In addition, the ADGM [Abu Dhabi Global Market] in the UAE, particularly Abu Dhabi, has emerged as a global crypto hub with strong ties to international markets. This has led to the adoption of crypto not only by retail customers, but also by large institutions and corporations.
BCN: Do you think crypto-based money transfer could one day replace SWIFT (Society for Worldwide Interbank Financial Telecommunication)?
MK:Crypto remittances are certainly eating into SWIFT’s dominance, and countries within the MENA region are increasingly relying on crypto, especially stable coins, for remittances. The fact that Egypt’s state-owned bank has already established a crypto remittance corridor between Egypt and the UAE, where a large number of Egyptians work, underscores the growing strength of crypto in remittances.
SWIFT, the current interbank messaging system for cross-border payments, is certainly inefficient today. Stablecoin and cryptography can make cross-border payments seamless, efficient, and fast. At least for money transfers, SWIFT solves a problem that should have been solved more than a decade ago.
Will crypto replace SWIFT for money transfers? It is unlikely, especially given that SWIFT’s operations continue to evolve; even if SWIFT’s innovations fail to meet user expectations, SWIFT has historically innovated enough that alternatives are not a serious problem. As the benefits of crypto-based remittances become more widely known and the technology continues to evolve, we can expect to see more crypto adoption and integration into the global financial system. As a result, crypto-based remittances may become the preferred means of cross-border payments.
BCN: What are some of the organizations like ADGM and the Middle East and Africa&Asia Crypto&Blockchain Association (MEAACBA) will help to accelerate the adoption of blockchain technology, even if only a little.
MK:The very fact that we launched the Venom Ventures Fund (VVF) from ADGM speaks volumes about the important role that ADGM plays not only for the blockchain industry, but for the financial services sector in general ADGM has emerged as the jurisdiction of choice for crypto investors and builders in the region. Its proactive regulatory regime allows all participants to collaborate and innovate.
Middle East, Africa and&Asia Crypto&” Blockchain Association (MEAACBA), based in ADGM, has the potential to accelerate the development of the [regional] blockchain ecosystem by providing members with a coordination mechanism between government agencies, regulators, banks, legal, tax and advisory firms.
BCN: Can you talk about how rapidly evolving local regulations will impact blockchain adoption?
MK:Historically, regulation has always lagged far behind innovation. Thankfully, this is not the case in the UAE, regulatory initiatives are ripe for innovation and they 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. Regulation will bring legitimacy to the blockchain industry and help institutions embrace crypto at a faster pace than ever before.
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