The Middle East's banks and financial regulators have been slower to adopt bitcoin than Europe and the United States. The crypto market in the Middle East was still in its infancy before the outbreak. However, after two years of rapid development, 2022 will be when the growing excitement about cryptocurrency's potential becomes industry leadership.
Throughout the Middle East, there have been rising signals that cryptocurrencies are moving from a nascent concept to an everyday part of life during the last 12 months. BitOasis, CoinMENA, and Yoshi Markets are among the bitcoin exchanges that raised funds. The recent news out of Bahrain about Rain, the region's first Sharia-compliant cryptocurrency network, is one of the most apparent signals that crypto is about to take off.
Al Waha partner funds VentureSouq and Middle East Venture Partners, and 500 Startups, backed the exchange, which raised $110 million in a Series B investment led by Kleiner Perkins and Paradigm, the world's largest crypto fund. The round is one of the largest in the Middle East and North Africa for any business. It sets the tone for what's to come in the region's crypto industry.
As countries acknowledge and begin to push the shift to digital transactions, cryptocurrency is attracting more significant investment and support from traditional businesses in the Middle East financial system. The current restrictions encourage the formation of crypto clusters, which could have a snowball effect on the use of digital currencies.
The government of the United Arab Emirates has set up a separate crypto zone at the Dubai World Trade Centre (DWTC), where cryptocurrencies and other virtual assets are controlled. Binance also struck a contract to build a new industry cluster dedicated to digital innovation and cryptocurrencies in the UAE. At the same time, FTX Exchange, one of the world's largest exchanges, was recently awarded a license to operate in the UAE. The exchange was also recognized by Bahrain's national bank, marking the first regulatory approval for a Binance firm in the Middle East.
Saudi Arabia is pitching itself as a potential center for emerging cryptocurrencies as part of a campaign to embrace digital transactions as part of its efforts to diversify the economy. Last year, the Saudi Arabian Monetary Agency (SAMA) declared that it would introduce an open banking policy, resulting in enhanced competition and openness in financial transaction data.
Bahrain is the vanguard of the region's impending crypto explosion as a financial services powerhouse. CoinMENA, an onshore exchange awarded a license by the European Union, has given the kingdom access to European markets.
The license paves the way for more jurisdictions to be added to the platform and increases the number of crypto assets available. CoinMENA has been the fastest growing cryptocurrency exchange in Mena, with a month-on-month growth rate of 140 percent.
FinHub 973, a first-of-its-kind virtual fintech platform, was developed by the Central Bank of Bahrain to let entrepreneurs test their ideas in the Regulatory Sandbox and connect with the hub's worldwide network for funding and commercial opportunities. FinHub 973 is a fantastic example of the driving reasons for the region's shifting fintech ecosystem because it is all about promoting innovation in the area.
The Middle East's fintech environment is changing, indicating governments, regulators, and the private and public sectors' desire to embrace and promote digital innovation. Countries are seeing the value of bitcoin and how digital transactions will influence how we exchange money and products.
Given the varied national goals and initiatives meant to attract new companies and assist economic diversification in the face of increasing competition, the increasing use of cryptocurrencies across the GCC is somewhat predictable. However, as indicated by last year, the rate of change is quickening. Over the next 12 months, we expect the sector to mature and contribute considerably to the region's overall growth and development as the Middle East's economic powerhouses gradually accept and foster cryptocurrencies.