Public Private Partnerships Drive Blockchain Innovation
By Abdul Al-Ali, Web3 Venture Investor, Decasonic
We're concluding our 5-part series on token use cases with an emerging powerhouse, the Middle East region. Explore the earlier parts, which examine the diverse strategies and innovations shaping blockchain development across the globe:
Part 1: Spotlight on Token Use Cases — an overview of global developments in token ecosystems.
Part 2: Asia's Thriving Web3 Ecosystem — highlighting Asia’s fast-growing Web3 market and technological advancements.
Part 3: Make Tokens Great Again — showcasing how innovation is breathing new life into tokenization strategies.
Part 4: Navigating Europe’s Blockchain Frontier — highlighting Europe’s role as a regulatory leader driving blockchain progress.
The Middle East is swiftly positioning itself as a hub for blockchain innovation, outpacing many Western markets with its proactive approach to regulatory frameworks. This strategic foresight by both private and public institutions is attracting institutional, business, and retail investors, making the region one of the fastest-growing in the world for crypto adoption. These regulations are not only shaping the landscape but also providing a stable environment for companies looking to innovate and scale in blockchain technologies. The establishment of a clear regulatory framework attracted widespread institutional interest, which is presented in the current token use cases across the region. We believe that this interest will spillover to retail interest - and we are starting to note this interest in utilizing crypto for retail, gaming/entertainment and e-commerce.
Institutional interest is particularly strong, as these frameworks create a clear path for operations and provide a secure foundation for businesses experimenting with cutting-edge technologies. This article begins by examining the regulatory milestones established by MENA countries, followed by an exploration of practical use cases in stablecoins, decentralized finance (DeFi), and payments. We also dive into the growing intersection of blockchain and AI in the region—a key focus for Decasonic—as we look ahead to the opportunities this convergence offers for new, transformative business models.
Regulatory Frameworks that Enhance Innovation
In the final part of our token use case series, we shift our focus to the Middle East and North Africa (MENA) region. Recently, the region has rapidly become a hub for blockchain innovations and crypto startups, led by its forward thinking approach to cryptocurrency regulation.
The UAE, in particular, stands out with its Virtual Assets Regulatory Authority (VARA) in Dubai, which regulates over 1,000 crypto-related entities registered in the country. VARA’s comprehensive framework, rolled out in September 2024, aims to create a safe and supportive environment for blockchain businesses and startups. VARA’s licensed VASPS (Virtual Assets Service Providers) can now service the entire country, providing a comprehensive regulatory framework for the country. Meanwhile, Qatar’s QFC Digital Assets Framework, introduced in 2024, has become a global model for digital asset regulation, providing clarity on tokenization, property rights, custody arrangements, and smart contracts. The result: Qatar is the second-fastest-growing crypto market in MENA, boasting a 120% year-over-year (YoY) growth rate.
Much of the regulatory excellence and forward-thinking regulation stems from the region’s public and private collaborations, including the efforts of Hub71 and Dubai Blockchain Center.
On a broader scale, MENA represented $338.7 billion in cryptocurrency transactions between July 2023 and June 2024, representing 7.5% of the global on-chain value. Institutional activity dominates the landscape, with 93% of transactions involving transfers of $10,000 or more, pointing to widespread institutional adoption of blockchain spurred by forward-driving regulations. Saudi Arabia has been particularly active, recording 154% growth in digital asset adoption and a recent $250 million investment in Hedera Blockchain to support Web3 and emerging technologies such as AI, IoT, and robotics.
As the region positions itself as a global fintech and Web3 leader, the UAE’s cryptocurrency inflows are also noteworthy, reaching $30 billion from July 2023 to June 2024. The UAE’s exemption of cryptocurrency transactions from VAT, coupled with its robust DeFi market, where decentralized exchange (DEX) transaction volumes rose from $6 billion to $11.3 billion YoY, highlights the impacts of its regulatory strategy.
Stablecoins: MENA Leading in Adoption and Innovation
The MENA region is fast becoming a global leader in stablecoin adoption, spurred by institutional and retail interest alike. Stablecoins account for 46.1% of total crypto value received in Saudi Arabia and 51.3% in the UAE, surpassing the global average of 44.7%.
In countries like Lebanon and Türkiye, stablecoins have become a critical tool for protecting wealth from devaluation, offering much-needed stability in volatile economic climates. Conversely, in the UAE, stablecoins serve as an essential gateway to broader crypto services, offering users a low-cost entry point to the growing digital asset ecosystem. Cross-border payments are also a significant use case, as stablecoins provide a faster, cheaper, and more transparent alternative to traditional financial systems, particularly in rural or less connected regions.
The UAE continues to push boundaries in stablecoin adoption. In August 2024, Tether announced plans to launch a dirham-pegged stablecoin, backed by liquid UAE-based reserves in collaboration with Abu Dhabi’s Phoenix Group. The new stablecoin aims to streamline international trade and reduce transaction fees, reflecting the region's leadership in stablecoin innovation. This followed Tether’s announcement of a partnership with RAK DAO - the government office for one of the UAE’s Emirates aimed to advance stablecoin adoption amongst retail users through education programs.
Central bank digital currencies (CBDCs) are also gaining traction, with Bahrain, Saudi Arabia, and the UAE nearing completion of their proof-of-concept projects. The Aber project, a joint venture between Saudi Arabia and the UAE, focuses on wholesale CBDCs for cross-border transactions. Meanwhile, Bahrain is exploring an interest-bearing CBDC as a monetary policy tool, further highlighting the region’s leadership in blockchain-enabled financial systems.
Stablecoins are a primary tool of blockchain adoption - and are a key indicator of a tipping point for mass institutional and retail adoption alike. Considering the growth of stablecoin usage in the region, we believe this will translate to an increase in mainstream adoption of blockchain technology and further use of blockchain across various verticals and sectors in the wider MENA region.
DeFi & Tokenization: Unleashing Liquidity and Financial Inclusion
Decentralized Finance (DeFi)
The MENA region has seen explosive growth in Decentralized Finance (DeFi), emerging as a key player in the global DeFi ecosystem. The value received by DeFi services in MENA, including decentralized exchanges (DEXs), has grown by 74% YoY. DEXs account for 30.9% and 32.4% of total crypto transaction volumes in Saudi Arabia and the UAE, respectively—well above the global average.
Driving this adoption is MENA’s young, tech-savvy population, with 63% of Saudi Arabia’s residents under the age of 30. This demographic is more open to experimenting with decentralized financial platforms, which offer alternatives to traditional banking systems. DeFi platforms such as MaskEx in Dubai are capitalizing on this trend by offering yield farming, liquidity provision, and other decentralized financial services within regulatory frameworks.
In April 2024, Medad Holdings (Dubai based) announced a strategic partnership with Franklin Templeton through an MoU to originate a tokenized yield-bearing money market security fund in the UAE. This token aims to offer investors the opportunity for collateral use-cases, and aims to bridge the traditional security offerings with new, blockchain based financial rails.
MENA’s DeFi ecosystem is creating new opportunities for unbanked and underbanked populations, especially in Saudi Arabia and the UAE. With high mobile penetration and growing internet access, DeFi offers a scalable solution for financial inclusion in areas underserved by traditional financial institutions. From our perspective, the confluence of blockchain innovation, regulatory support, and demographic readiness makes DeFi one of the most promising sectors in the region.
Tokenization
The tokenization of real-world assets (RWA) is gaining significant traction across the MENA region, particularly in the real estate sector. The Dubai Land Department (DLD) has pioneered the tokenization of high-value real estate, allowing fractional ownership through blockchain. This initiative not only democratizes access to prime real estate markets but also enhances transparency and reduces transaction costs.
In July 2024, Mantra partnered with UAE-based MAG to tokenize $500 million of real estate, starting with Dubai’s Keturah Reserve. This tokenization initiative is backed by MAG’s corporate credit and other assets, offering investors unprecedented liquidity and access to the region’s high-growth real estate market. As MENA’s regulatory frameworks evolve, further tokenization of financial instruments and real estate is expected, offering increased accessibility and liquidity for investors.
Tokenized financial instruments are also taking shape, with Saudi Arabia’s stock exchange Tadawul preparing to launch a blockchain-based platform for trading tokenized securities by 2025. Additionally, HSBC and Abu Dhabi Securities Exchange (ADX) are exploring the tokenization of fixed-income securities using HSBC’s Orion blockchain, further advancing the financial markets in the region.
Payments: Driving Financial Inclusion and Commerce
Payments remain one of the most exciting areas for blockchain adoption in MENA, particularly for the region’s large unbanked and underbanked populations. Around 22% of the population in GCC countries is unbanked, rising to 50% in the broader MENA region. Blockchain-enabled payment systems are transforming this landscape by providing faster, more affordable, and more convenient alternatives to traditional offerings.
Major GCC-based retailers like Majid Al Futtaim have already embraced crypto payments across their malls and hotels, partnering with Binance to facilitate digital payments since 2022. More recently, in August 2024, Dubai officially recognized cryptocurrency as a valid salary payment method, further accelerating stablecoin adoption across the region. The introduction of crypto-linked debit and credit cards is also driving retail adoption, with a recent survey indicating that over 50% of individuals under 40 in the GCC believe crypto should be used for payments.
With platforms like Telegram and WhatsApp heavily used in MENA, the integration of blockchain-enabled payment systems on these platforms holds tremendous potential. MENA accounts for 8% of Telegram’s user base, with over 30 million weekly active WhatsApp users, presenting a unique opportunity for decentralized payments to go mainstream, and for businesses to offer payment services through social clients like Whatsapp and Telegram.
Player-Driven Economies: Intersection of Blockchain and Gaming
Alongside its pioneering efforts in blockchain regulation, the Middle East is also emerging as a global hub for gaming innovation. The region's gamer population is projected to grow 30% annually, reaching 88 million by 2026. Saudi Arabia leads globally with 89% of its population engaged in gaming, positioning it as a leader in gaming per capita. The UAE and Saudi Arabia drive the region’s gaming ecosystem through significant investments, regulatory advancements, and strategic initiatives.
Saudi Arabia's ambitious goal to make gaming account for 1% of its GDP by 2030 has fueled massive investments in gaming and eSports, including the launch of its National Gaming and eSports Strategy. Similarly, Dubai has unveiled its own vision through the Dubai Gaming Program. The convergence of the region’s blockchain adoption and booming gaming sector creates endless opportunities at this intersection. In Saudi Arabia’s NEOM city, its dedicated investment fund recently partnered with Animoca Brands to spearhead Web3 game development, extending to a broader collaboration with the King Abdulaziz City for Science and Technology to establish a Web3 hub in Riyadh. Meanwhile, the UAE ranks among the top 15 countries investing in Web3 gaming, with AAA titles currently in development.
The leadership of Saudi Arabia and the UAE in both gaming and blockchain is even drawing IPO interest from Animoca Brands, a testament to the region's untapped potential. Furthermore, the rise of titles like Off the Grid—which recently topped the Epic Games Store—reinvigorates global interest in Web3 gaming. We believe blockchain will redefine traditional games by enabling player-driven economies where assets are truly owned by players. The integration of AI into games adds another layer of innovation, offering enhanced gameplay and elevated user experiences.
Decentralized AI: The Intersection of Blockchain and AI
At Decasonic, we operate at the intersection of AI, Web3, and blockchain, and MENA is emerging as a key player in the global AI landscape. Countries like the UAE, Saudi Arabia, and Bahrain are spearheading national AI strategies, aiming to become leaders in AI by 2030. The UAE’s Vision 2031 AI strategy is central to this vision, while Saudi Arabia recently launched a $40 billion AI investment fund, signaling its commitment to AI adoption and innovation.
The UAE’s Council for Artificial Intelligence and Blockchain reflects the country’s strategic vision to integrate AI and blockchain across all sectors. Saudi Arabia’s Data and AI Authority is similarly fostering an AI ecosystem that attracts global startups and encourages local innovation.
For investors, the opportunities at the intersection of blockchain and AI are complementary. One of the major struggles of AI companies is their business models - with OpenAI recently projecting their losses to triple in 2026 to $14 billion. Blockchain presents an opportunity to democratize access to compute, providing opportunities for AI startups to leverage blockchain infrastructure to scale their LLMs and Gen AI models. We believe the intersection of blockchain and AI is imminent - with the integration of those two emerging technologies offering the MENA region an opportunity to set global standards in and attract leading talent.
Conclusion: MENA’s Leading Role in Blockchain Adoption
MENA’s forward-thinking regulatory frameworks, strong institutional interest, and rapidly growing blockchain and AI ecosystems position the region as a global leader in emerging technologies - with opportunities at the intersection of blockchain and AI increasingly likely. We at Decasonic believe MENA is set to lead the next wave of blockchain adoption, driving financial inclusion and transforming industries across the region with a global impact.
At Decasonic, we are excited to collaborate with innovators at the intersection of blockchain, AI, and Web3. If you’re building in this space, whether in MENA, SEA, Europe, or any other region, reach out to us—we’re eager to support your journey and push you to pursue greatness and transform your vision into reality.
The content of this material is strictly for informational and educational purposes and is not meant to constitute investment advice or a recommendation or a solicitation to buy or sell any asset or to make any financial decision. Nothing in these blog posts should be considered legal or tax advice. You should consult with your own professional advisor before making any financial decision. Decasonic offers no warranties on any content in the material posted in these blog posts, including that it is accurate, complete, or correct. The opinions expressed in these posts are those of the authors and do not necessarily reflect the views of Decasonic. Decasonic is not liable for any errors or omissions in the content of this newsletter or for any actions taken based on the information provided herein.
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