Crypto Seen as Investment Opportunity in MENA Region, Says Iceberg Capital CEO – Interview With
While interest in digital assets has waned in some parts of the world, crypto adoption has skyrocketed in the Middle East and North Africa, according to Mustafa Kheriba, CEO of asset management firm Iceberg Capital Limited. According to Kheriba, factors such as the high have inflation and the residents’ desire for high-yield investment opportunities cryptocurrency attracted.
The many advantages of Blockchain
Despite bearish conditions lasting much of 2022, according to Mustafa Kheriba, the Executive Chairman of Iceberg Capital Limited, Interest and adoption of crypto and blockchain has not gone away. To back up this claim, Kheriba pointed to the 23rd State of the Developer report, which suggests that most experienced software developers are “most likely working on blockchain projects.”
Nevertheless, the Iceberg Capital Limited The CEO told opposite Bitcoin.com News that interest has grown particularly in the Middle East and North Africa (MENA) region, where some regulators have taken the initiative by creating or proposing to create frameworks for regulating crypto assets.
In addition, Kheriba said that factors such as inflation or the devaluation of national currencies have helped increase the number of citizens who have chosen crypto. On the other hand, cryptocurrency is increasingly viewed as an investment opportunity for residents of more affluent countries.
In the remaining 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 exploding in the MENA region and would you say users are being pushed towards or drawn from crypto by outside forces?
Mustafa Kheriba (MK): Momentum in the MENA region has been building for some time for a number of reasons. Country-specific factors play a role. Inflation in countries like Egypt and Turkey is driving people towards crypto as a store of value and hedge against fiat currency devaluation. This is particularly relevant in countries where government monetary policy is unpredictable and stability cannot be relied on.
On the other hand, in the Gulf States, the rapidly evolving regulatory environment, financial institutions, banks and high net worth individuals (HNWIs) are using crypto as an investment opportunity. The blockchain technology behind crypto has many advantages including decentralized finance (defi) over traditional finance (tradfi) that is becoming more apparent to banking and finance professionals in the region.
Additionally, the convenience and cost-effectiveness of cross-border transfers is attracting people to crypto. In a region where cross-border payments can be expensive, time-consuming, and often opaque, crypto offers a faster, easier, and cheaper alternative. This is particularly relevant for migrant workers looking for ways to send money home to their families.
Overall, it is a combination of external factors and crypto’s unique characteristics that are driving crypto adoption in the MENA region by leaps and bounds. As the regulatory environment evolves and more people become aware of the benefits of crypto, we can expect even more growth in the region’s crypto market in the years to come.
BCN: How do the main 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 figuring out how to regulate crypto, the UAE and other Gulf countries have focused on creating a regulatory framework that encourages the market to develop while sticking 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 transfers offer a faster, easier, and cheaper alternative, making them a popular choice in the region.
In addition, the UAE and in particular the ADGM [Abu Dhabi Global Market] in Abu Dhabi, has grown into a global crypto hub with strong connections to international markets. This has not only pushed retail customers but also large institutions and companies to adopt crypto.
BCN: Do you think crypto-based remittances could one day replace the Society for Worldwide Interbank Financial Telecommunication (SWIFT)?
MK: Indeed, crypto remittances have impacted SWIFT’s dominance, and countries within the MENA region are increasingly relying on crypto, particularly stablecoins, for remittances. The fact that the National Bank of Egypt is already building a crypto remittance corridor between Egypt and the United Arab Emirates, 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. Stablecoins and crypto technology can make cross-border payments seamless, efficient and fast. They solve the problems, at least for transfers, that SWIFT should have solved over a decade ago.
Will crypto completely replace SWIFT as the preferred mode for remittances? That’s unlikely, especially given that SWIFT’s business is constantly evolving. While their innovations haven’t been able to keep up with user expectations, they’ve innovated enough in the past to prevent alternatives from being a serious challenge. As more and more people become aware of the benefits of crypto-based remittances and as technology advances, we can expect greater adoption and integration of crypto into the global financial system. This could eventually lead to crypto-based remittances becoming the preferred method for cross-border payments.
BCN: How, if at all, are ADGM and organizations like the Middle East, Africa & Asia Crypto & Blockchain Association (MEAACBA) helping to accelerate 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 ADGM plays not only for the blockchain industry but for the financial services sector in general. ADGM has emerged as the preferred jurisdiction for crypto investors and builders in the region. Its proactive regulatory system enables everyone involved to collaborate and innovate.
As the Middle East, Africa & Asia Crypto & Blockchain Association (MEAACBA) is based in the ADGM, the MEAACBA has the potential to accelerate the development of the [region’s] Blockchain ecosystem by providing its members with a coordination mechanism between government agencies, regulators, banks, legal, tax and consulting firms.
BCN: Can you discuss how the region’s rapidly evolving regulations are likely to impact blockchain adoption?
MK: In the past, regulations have always lagged far behind innovations. Fortunately, this is not the case in the UAE, where regulatory initiatives have been innovation-friendly and evolving. A balanced regulatory framework is needed to ensure that the crypto space is safe for large institutions, traditional commercial enterprises, developers and users alike. Regulations will bring legitimacy to the blockchain industry and help institutions adopt crypto faster than ever.
What do you think about this interview? Let us know what you think in the comment section below.
photo credit: Shutterstock, Pixabay, WikiCommons
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