The West is often seen as the de facto capital for global technology, far overshadowing emerging regions such as the Middle East and North Africa (MENA). As the MENA region leapfrogs in digital innovation and emerging technologies, there is a growing urgency and importance in recognizing the position that the region holds in steering the progress of blockchain and digital assets in the world.
Most recently, The Bitcoin Fund became the first crypto fund to be listed on a major exchange – the Nasdaq Dubai, while the Bank of Israel leverages Ethereum’s technology for a digital shekel trial. With progressive regulations and a growing number of projects born out of its conducive landscape, how is the MENA region quickly becoming a crypto capital steering the future of finance?
Growing Institutional Acceptance
With the region making inroads when it comes to digital assets, governments and companies in MENA are embracing blockchain and furthering its use. MENA governments have played a decisive role in driving economies in the direction of digital transformation by embracing blockchain and digital assets.
The United Arab Emirates government, for example, launched the Emirates Blockchain Strategy 2021 to transition half of all government transactions onto the blockchain by this year. Dubai’s Multi Commodities Center (DMCC) also established a Crypto Center earlier this year to support businesses in the blockchain and cryptographic sectors. Similarly, the Saudi Arabian Monetary Authority was also among the first in the world to deploy blockchain technology for money transfers. From government support to adoption, it’s clear that the technology plays a crucial role in shaping the growth and development of MENA countries.
With the growing institutional acceptance, governments have welcomed blockchain and crypto innovation through regulatory licenses – providing guardrails and testbeds for fintech companies to thrive and innovate. The Central Bank of Bahrain’s Fintech and Innovation Unit is one of such that provides Sandbox authorization for companies to test innovative fintech solutions, encouraging further growth and progress for the industry. As countless governments across the world clamp down and tighten regulations on crypto, MENA’s welcoming stance on blockchain and digital assets is vital to the continued global development of the sector.
Another driving force behind the growth of digital assets in the MENA region is the green revolution. Today, countries within the region are leveraging blockchain technology to further their sustainability agendas. With a unique opportunity for blockchain and crypto’s growth in green initiatives, companies within MENA are leading innovative projects centered at this intersection of technology and sustainability.
As Saudi Arabia continues its track to make renewable energy half of its energy production by 2030, traditional energy producers such as oil giant Aramco have made the transition to blockchain to increase efficiency and sustainability. Similarly, smart city initiatives such as Dubai’s Sustainable City – the first net-zero energy development in the UAE — and other up-and-coming smart cities such as Dubai South and Desert Rose City are utilizing blockchain to power their processes.
As the pandemic heightened awareness of environmental, social, and governance (ESG) factors, driving sustainability-focused funds to near US$2 trillion, much of the investments are still significantly concentrated in Europe and North America. Yet, with a global annual financing gap of US$2.5 trillion to be bridged to achieve the United Nations’ Sustainable Development Goals (SDGs), MENA’s blockchain and digital asset innovation have the potential to fast-track green initiatives across the world.
Many local businesses are already championing blockchain and digital assets to advance ESG projects. Recently, the world’s first token to be minted from the tokenization of a Tesla charging unit was launched in Bahrain and is an example driving the development of green technologies while encouraging the use cases of digital assets. This is just one example showcasing the potential of digital assets in lowering funding barriers in ESG initiatives. By digitizing and fractionalizing large hard assets — from the likes of electric vehicle charging units to solar panels or wind turbines — tokenization can increase access to assets that were previously inaccessible to institutional and retail investors.
As sustainability continues to be an urgent global agenda, the MENA region’s lead in blockchain and digital asset innovation in the green sector will no doubt cement its position as a decisive leader driving digital initiatives within ESG.
As we continue the uphill battle with climate change, sustainability will no doubt remain top-of-mind for governments and institutions across the world. With the obvious synergies between crypto and sustainability, bringing both sectors together will be mutually beneficial to advancing blockchain and digital assets and reaching the goal of a greener tomorrow.
While the region has often been overlooked, it is clear that we now need to take MENA’s lead on its forward-looking policies, regulation, initiatives, and innovation. Looking ahead, the MENA region is rising to become a valuable crypto capital that will drive the development and progress of digital assets across the world.