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As interest in digital assets has waned in parts of the world, in the Middle East and North Africa, crypto adoption has skyrocketed according to Mustafa Kheriba, executive chairman of asset management company Assets Iceberg Capital Limited. According to Kheriba, factors such as high inflation and residents’ desire for high yielding investment opportunities have attracted many people to cryptocurrency.
The Many Benefits of Blockchain
Despite the bearish conditions that have persisted for much of 2022, according to Mustafa Kheriba, Executive Chairman of Iceberg Capital Limited, interest and adoption in crypto and blockchain has not dissipated. To back up this claim, Kheriba pointed to the 23rd State of the Developer Report which suggests that the most experienced software developers are “most likely to work on blockchain projects.”
Nevertheless, the executive chairman of Iceberg Capital Limited told Bitcoin.com News that interest has particularly increased in the Middle East and North Africa (MENA) region where some regulators have taken the initiative in establishing or proposing to establish regulatory frameworks for crypto assets.
Furthermore, Kheriba said that factors such as inflation or depreciation of national currencies have played a role in increasing the number of citizens embracing crypto. In contrast, for residents of wealthier countries, cryptocurrency is increasingly viewed as an investment opportunity.
In the rest of his written responses sent to Bitcoin.com News via Whatsapp, Kheriba also shared his thoughts on the future of the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
Below are the rest of Kheriba’s responses to the questions sent.
Bitcoin.com News (BCN): Why is crypto adoption skyrocketing in MENA and would you say users are being pushed into crypto by external forces or being pulled by crypto?
Mustafa Kheriba (MK): The momentum within the MENA region has been building for some time now, for multiple reasons. There are country-specific factors at play. Inflation in countries like Egypt and Turkey is pushing people towards crypto as a store of value and as a hedge against fiat currency devaluation. This is particularly relevant in countries where government monetary policy is unpredictable and cannot be relied upon for stability.
On the other hand, in the Gulf countries, with rapidly changing regulatory frameworks, financial institutions, banks, and high net worth individuals (HNWIs) are embracing crypto as an investment opportunity. The blockchain technology behind crypto has many advantages, including decentralized finance (Defi) over traditional finance (Tradfi), which is becoming increasingly apparent to banking and finance professionals in the region.
Additionally, the convenience and cost-effectiveness of cross-border remittances attract people to crypto. In a region where cross-border payments can be expensive, time-consuming, and often opaque, crypto offers a faster, simpler, and cheaper alternative. This is particularly relevant for migrant workers looking for ways to send money home.
Overall, it is a combination of external factors and the unique characteristics of crypto that are driving crypto adoption in the MENA region sky high. As the regulatory environment continues to evolve and more people become aware of the benefits of crypto, we can expect to see even more growth in the region’s crypto market in the coming years. .
BCN: How do the key drivers of crypto adoption in the MENA region differ from those in the rest of the world?
MK: One of the main differences is the regulatory environment. While the rest of the world is still looking to regulate crypto, the UAE and other Gulf countries have focused on creating a regulatory framework that encourages market development while adhering to the AML. [anti-money laundering] guidelines. This has created a safe environment for financial institutions, banks, and businesses to adopt blockchain technology.
Another factor driving crypto adoption in the MENA region is the emphasis on secure cross-border remittance transfers. The region has a large migrant population and traditional cross-border payments can be costly and time-consuming. Crypto remittances offer a faster, easier, and cheaper alternative, making it a popular choice in the region.
In addition, the United Arab Emirates and more specifically the ADGM [Abu Dhabi Global Market] in Abu Dhabi, has become a global crypto hub with strong ties to international markets. This has attracted not only retail customers but also large institutions and corporations to embrace crypto.
BCN: Do you think crypto-based remittances could one day replace the Society for Worldwide Interbank Financial Telecommunications (SWIFT)?
MK: Crypto remittances have indeed dented SWIFT’s dominance, and countries in the MENA region are increasingly relying on crypto, especially stablecoins, for remittances. The fact that the Egyptian National Bank is already building a crypto remittance corridor between Egypt and the United Arab Emirates, where a large number of Egyptians work, highlights the growing strength of crypto in remittances.
SWIFT, the current interbank messaging system for cross-border payments, is certainly inefficient today. Stable coins and crypto technology can make cross-border payments seamless, efficient, and fast. They solve the problems, at least for remittances, that SWIFT should have solved more than ten years ago.
Will crypto completely replace SWIFT as the preferred mode for remittances? This is unlikely, especially considering that SWIFT’s operations continue to evolve. Even if their innovations have not been able to keep pace with user expectations, they have historically introduced enough innovation to prevent the alternatives from posing a serious challenge. As more people become aware of the benefits of crypto-based remittances and as the technology continues to evolve, we can expect to see more adoption and integration of crypto into the system. global financial. This could eventually lead to crypto-based remittances becoming the preferred mode for cross-border payments.
BCN: How does ADGM and organizations such as the Middle East, Africa & Asia Crypto & Blockchain Association (MEAACBA) contribute, if at all, to accelerating the adoption of blockchain technology?
MK: The very fact that we launched our Venom Ventures Fund (VVF) out of ADGM speaks volumes about the critical role that ADGM plays not only for the blockchain industry, but for the service sector. finance in general. ADGM has become the jurisdiction of choice for crypto investors and builders in the region. Its proactive regulatory regime enables all participants to collaborate and innovate.
With the Middle East, Africa & Asia Crypto & Blockchain Association (MEAACBA) based in the ADGM, the MEAACBA has the potential to help accelerate the development of the [region’s] blockchain by providing its members with a coordination mechanism between government agencies, regulators, banks, legal, tax and consulting firms.
BCN: Can you explain how rapidly changing regulations in the region are likely to affect blockchain adoption?
MK: Regulations, historically, have always lagged far behind innovation. Fortunately, this is not the case in the United Arab Emirates, where regulatory initiatives have been supportive of innovation and continue to evolve. A balanced regulatory framework is needed to ensure the security of the crypto space for large institutions, traditional commercial enterprises, developers and users. The regulations will bring legitimacy to the blockchain industry and help institutions adopt crypto at a faster rate than ever before.
What do you think of this interview? Let us know what you think in the comments section below.
Terence Zimwara
Image credits: Shutterstock, Pixabay, Wiki Commons
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