Turbulent Middle Eastern Crypto Market Welcomes Leadership Change

The UAE is rapidly rising, leading to a diversification in the crypto landscape of the Middle East and North Africa.

Written by: Chainalysis Team

Compiled by: Luffy, Foresight News

The data research organization Chainalysis has released its latest crypto adoption report. The report mentions that from July 2025 to June 2026, the crypto economy in the region is projected to reach $443.3 billion, a slight decrease of 1.4%. The UAE's crypto economy is expected to surge by 32%, potentially surpassing Turkey by 2027; Turkey is advancing licensing compliance, leading to a surge in demand for tokenized gold; Iran is experiencing disruptions due to internet outages and conflicts, with trading initially declining before recovering; the Israeli market is stabilizing, with the volatility caused by geopolitical shocks diminishing. Below is the Chinese translation of the report's Middle East and North Africa section:

The statistical period of this Chainalysis report is from July 2025 to June 2026, during which the entire Middle East and North Africa region is shrouded in geopolitical uncertainty, and the development of the crypto market shows distinctly different trends. The conflict in Iran that erupted on February 28, 2026, has brought cross-border pressures affecting all markets covered in this study. Additionally, each country faces its own risk events: Iran is experiencing internet outages and regulatory crackdowns, while Turkey is pushing for compliance in its crypto licensing transformation.

The bear market in 2026 has halved the total crypto market capitalization, but global on-chain economic activities have been minimally affected, and the Middle East and North Africa region follows this pattern. The regional crypto economy has slightly decreased from $449.6 billion to $443.3 billion, a decline of 1.4%, which is roughly in line with global levels. Among the 24 Middle Eastern and North African markets with available statistical data, 16 markets have achieved growth. The overall scale of the region has hardly changed, primarily due to Turkey and the UAE, which together account for 56% of the regional crypto economy. Their opposing trends offset each other. What truly influences the crypto market landscape in the Middle East and North Africa is not the bear market itself, but the various regional disturbances layered on top of it.

MENA (Middle East and North Africa) Cryptocurrency Economy

The overarching theme across the regional market is the general pressure brought about by geopolitical and economic uncertainties. Institutional capital seeking stable and compliant crypto hubs is concentrating in the UAE; Turkish exchanges are adjusting to meet new licensing requirements, while ordinary retail investors are bypassing exchanges and trading directly from wallet to wallet. Each country's market response varies, but fundamentally, they are all reactions to the broader environmental conditions in the region.

Turkey: $144.5 Billion Crypto Market Shifts from Exchange-Dominated to Institutional

During the statistical period, Turkey, with a crypto economy size of $144.5 billion, remains the largest market in the Middle East and North Africa, accounting for nearly one-third of the entire region's total. This statistical scope includes all capital inflows from platform inflows, domestic peer-to-peer transactions, cross-border peer-to-peer transactions, and cross-border business-to-person transfers. Turkey's overall scale has slightly contracted year-on-year, but this represents a market transformation rather than a decline. Trading activities have shifted from licensed service providers to direct wallet transfers, while institutional participation from banks and licensed platforms continues to deepen. The end result is a slight shrinkage in market size, but a more solid structure.

At the end of this statistical period, Turkey officially implemented new regulatory rules for the crypto industry, requiring all crypto asset service providers (CASPs) within the country to obtain licenses issued by the financial regulatory agency SPK. In simple terms, crypto service providers now need to comply with the same regulatory processes as traditional financial institutions. Burcu Küçükünal, CEO of Turkish exchange Stablex, stated, "This regulation raises the operational threshold for the entire industry."

"In Turkey, crypto assets are becoming part of the traditional financial system, rather than a parallel independent system to traditional finance," said Burcu Küçükünal.

Industry insiders participating in the research believe that compliant exchanges will be better positioned to meet institutional demands under the new regulatory framework. Fatih Günaydın, General Manager of İş Digital Asset Technologies, mentioned that Turkey's licensing standards, operational rules, and capital requirements have aligned with international standards, which is an important development for Turkey and is expected to drive growth in crypto service businesses.

Salim Karaman, CEO of Turkey's largest crypto exchange BtcTurk, stated, "Within the same financial group, providing both securities and crypto asset services under the corresponding qualifications and ensuring business separation is increasingly being included in industry planning. The biggest change in the past 12 months is that the industry is no longer just assessing market heat and potential opportunities, but is beginning to build supporting services and conduct business in compliance with the regulatory framework."

Turkey's $3.56 Billion Peer-to-Peer Trading Demand Is Hard to Replace

Even as the institutional ecosystem continues to mature, grassroots crypto trading in Turkey remains robust. During the statistical period, Turkey's peer-to-peer trading volume quadrupled to $3.56 billion, leading the Middle East and North Africa region by a wide margin. The size of Turkey's peer-to-peer crypto market is nearly three times that of all other countries in the region combined, with almost all growth coming from stablecoins.

Although Turkey's peer-to-peer market is substantial, these transactions cannot be directly used for real economy payments like in other countries.

Fatih Günaydın explained, "Turkish regulations prohibit the use of crypto assets to purchase goods and services. However, stablecoins, with their small buy-sell price differences and convenient transfer advantages, have become a savings tool for the public; at the small and medium enterprise level, stablecoins are only used within the legal limits allowed by both countries for international trade."

Turkey's P2P Trading Volume Exceeds the Total of MENA's Other Regions

Küçükünal also noted, "Currently, the vast majority of transactions are still primarily for investment and value preservation. The logic is simple: for many years, inflation has continuously eroded residents' wealth, and the dollar is a stable value-preserving choice, while stablecoins pegged to the dollar can be held as long as one has a wallet." This model is also quite common in other high-inflation countries around the world.

However, the Central Bank of Turkey explicitly prohibits the use of crypto assets for payment of goods and services, so the $3.56 billion in wallet transfers is not for real commodity transactions between buyers and sellers, but mostly just a tool for savings and fund transfers between Turkish users, denominated in dollars.

Küçükünal pointed out the contradiction, "The most promising scenario for stablecoins in Turkey is payment and domestic and international transfers, but these uses are currently not allowed. If a clear legal framework for stablecoin payments is established, market demand will far exceed mere trading demand."

Regulatory Changes Drive the Explosion of Turkey's Tokenized Gold Market

Despite the high popularity of stablecoins, they are not the preferred savings tool for the Turkish public; physical gold remains the traditional value-preserving asset for Turkish households, Küçükünal stated. Turkish people have a long-standing habit of hoarding gold, with large amounts of gold being privately collected, and data shows that domestic private gold hoarding reaches as high as 5,000 tons.

During this statistical period, this traditional demand began to shift to on-chain: Turkey has become one of the countries with the highest prevalence of tokenized gold globally. Tokenized gold trading, which was almost zero before, reached nearly $1 billion in 2026. Küçükünal observed a surge in tokenized gold trading volume on the Stablex platform: "The demand for tokenized gold indicates that Turkish investors want to trade familiar assets through new on-chain channels."

Main Fiat Trading Pairs for Tokenized Gold

Exchange order data also confirms this. We analyzed the trading heat of tokenized gold purchased with Turkish lira and found that the lira is the second largest fiat currency used for purchasing tokenized gold globally, second only to the dollar. Among all currencies with transaction volumes exceeding $100 million, the proportion of Turkish lira flowing into tokenized gold trading is higher than any other currency.

This wave of enthusiasm coincided with the Turkish Ministry of Finance's adjustment of gold management policies. In January 2026, Turkey introduced new regulations prohibiting the use of cash to purchase gold bars, gold jewelry, and other physical gold. This tracking system, known as KMTS, aims to combat the underground economy and prevent gold counterfeiting.

The ban on cash purchases of gold did not suppress gold demand; it merely changed the direction of demand, creating a need for tokenized gold trading: after the policy announcement, tokenized gold trading immediately saw a surge. For example, in February, the trading volume reached $183.9 million, accounting for 2.51% of the total lira trading volume, as traders positioned themselves ahead of the formal restrictions. A few months later, when the restrictions were officially implemented, the rush to buy cooled down, but the trading volume's bottom was already significantly higher than before the policy, establishing a stable trading base for tokenized gold.

Turkish Lira Tokenized Gold Trading: From Zero Scale in 2024 to $974 Million in 2026

The Turkish government has also embraced this trend in its regulation. In July 2026, the official announcement of new regulations standardized digital precious metal trading. The implementation of regulation is likely to continue to boost growth in this sector.

Fatih Günaydın stated, "With clear regulations in place, the market is shifting from merely pursuing trading volume to a mature ecosystem centered around institutional products."

UAE Embraces Crypto Industry, Policy Dividends Realized

For many years, the UAE has actively attracted crypto companies to establish operations as part of its strategy to reduce dependence on oil and promote economic diversification. Being a pioneer in crypto regulation has also allowed the UAE to gain a voice in the emerging global financial market.

This diversification strategy has yielded results in a turbulent environment. Even though the Iranian conflict has brought regional geopolitical risks that have dragged down the growth of other sectors in the UAE, its crypto economy still grew by 32%, reaching $104.8 billion. Excluding the UAE, the overall crypto economy in the rest of the Middle East and North Africa shrank by 8.6%, rather than 1.4%. Henri Arslanian, co-founder of Nine Blocks Capital Management, the first licensed crypto hedge fund under Dubai's crypto regulatory authority VARA, stated, "The war has impacted the UAE's tourism, hotel, and other industries, but the impact on the crypto industry has been very limited."

UAE Crypto Economy Size Under Different Statistical Periods

Arslanian added, "Outside the United States, the Middle East, especially the UAE, has become a core hub for global crypto operations." He believes that the proactive issuance of licenses by UAE regulators is a catalyst for industry development, "significantly reducing the concerns of corporate executives about establishing digital asset businesses."

Laurent Girouille, Senior Executive Officer of Rain Trading Limited, stated, "A year ago, discussions about the UAE crypto market focused on retail access; now the questions we receive are more operational: Are counterparties compliant? Where are the assets custodied? How is settlement reconciled? Most of the inquiries come from corporate treasury departments, family offices, and licensed intermediaries, rather than novice investors."

Data also corroborates this. The UAE's $102.3 billion crypto service sector is the core driver of growth in this cycle. This segment has grown by 29% year-on-year, with inflows to centralized exchanges increasing by 22% to $55 billion; the scale of institutional platforms, including custodians and market makers, has surged by 75% to $11.7 billion. Total inflows to DeFi exchanges exceeded $31 billion, up 31% year-on-year.

Although crypto services are the core engine of the UAE market in terms of volume, the growth rate of the smaller peer-to-peer business is even more astonishing: domestic peer-to-peer payments skyrocketed by 786% year-on-year, while cross-border peer-to-peer inflows increased 18-fold; cross-border corporate payments also surged nearly 400%, primarily driven by large stablecoin transfers exceeding $1 million.

Growth Rates of Various Segments in the UAE Crypto Market

Arslanian stated, "Many people around the world underestimate the scale of stablecoin usage in the UAE's B2B scenarios. The UAE has become a global hub for such transactions." He attributes this to the large number of compliant over-the-counter brokers in the region, which have established mature fiat withdrawal channels, facilitating businesses to convert crypto assets into fiat.

A spokesperson from Fuze Finance remarked, "Stablecoins are increasingly seen as financial infrastructure, rather than just trading assets within the crypto market. We are seeing more and more institutions willing to use stablecoins for cross-border settlements, corporate treasury management, merchant payments, and cross-border remittances."

Amid rapid growth, the UAE's crypto economy is quickly approaching the region's top position. By the end of the statistical period, its scale had reached nearly 70% of the long-time leader, Turkey. At the current growth rate, the UAE is expected to surpass Turkey by 2027.

Relative Scale of Crypto Markets in MENA Countries (with Turkey as 100% Benchmark)

Arslanian commented, "The case of the UAE growing into a global crypto hub will be studied repeatedly by regulators in various countries on how to seize this opportunity."

How the Iran Conflict Changes UAE Users' Crypto Investment Preferences

The war has not hindered the growth of the UAE's crypto service industry, but it has changed investors' trading behaviors. The proportion of tokenized gold holders has increased, while the proportion of Bitcoin holders has relatively decreased. Similar to Turkey's KMTS cash ban pushing gold demand on-chain, the triggering factors are different, but the underlying logic is the same: under uncertainty, investors choose familiar assets and allocate through on-chain channels.

It should be noted that, within the UAE and globally, Bitcoin's popularity remains far higher than that of tokenized gold. In many cultures, both are considered safe-haven assets in uncertain environments, with Turkey's performance particularly notable. Girouille from Rain mentioned, "Gold has been a savings habit for hundreds of years." In March 2026, the UAE faced its first attack from Iran, and the number of users holding Bitcoin and tokenized gold rose simultaneously.

However, during the subsequent relatively calm phase, the trends of the two asset classes diverged. After the ceasefire agreement was broken, the proportion of tokenized gold holders in the UAE continued to rise, with more and more people buying tokenized gold; in contrast, the number of Bitcoin holders began to decline. Those who bought Bitcoin as a hedge at the beginning of the conflict chose to sell when the situation calmed down. Gold holders, on the other hand, tend to hold long-term.

Number of Wallets Holding Tokenized Gold vs. Bitcoin in the UAE

This difference partly stems from local cultural perceptions. Gold is more often seen as a long-term savings asset in the region, rather than a frequently traded item. While Bitcoin may serve as a safe-haven savings vehicle in other regions, the data from the UAE during this cycle does not support this: buying Bitcoin during conflict and selling it when the situation calms; gold, however, is held long-term.

Turkey's cash purchase ban on gold has spurred demand for tokenized gold, while the UAE's demand is driven by geopolitical conflict. The triggering reasons differ, but the outcomes are the same: as long as there is compliant infrastructure to support familiar assets, demand will flow on-chain.

Iran: Internet Blackouts, Conflicts, and Protests Shape Local Crypto Usage Landscape

Iran has a significant crypto economy, but it also has a lot of illegal uses. Ordinary citizens use Bitcoin and stablecoins to hedge against ongoing inflation and meet daily financial needs; at the same time, Iranian entities also use crypto assets to evade sanctions and fund the Islamic Revolutionary Guard Corps, while regulators continue to crack down on related underground crypto networks. Therefore, our analysis of crypto adoption in Iran focuses solely on the daily usage behaviors of ordinary users within the country, excluding illegal transactions.

We first observe the impact of multiple large-scale internet blackouts in 2026 on crypto usage. The Iranian government cut off ordinary citizens' access to external networks twice: the first time in January, after economic protests erupted and were quelled, the blackout lasted for 20 days; the second time, shortly after the outbreak of war, lasted for 88 days. Both blackouts severely restricted the public's use of crypto assets.

Data shows that during the first week of the first blackout, the number of Bitcoin transactions from personal wallets in Iran dropped by nearly 90% compared to baseline levels; after the blackout was lifted, transactions rebounded rapidly, even exceeding baseline levels. A month later, when the war broke out and the second blackout began, Bitcoin transactions again declined, with a drop of about 80%.

A key point: during both blackouts, Bitcoin transactions in Iran did not drop to zero. Especially during the second prolonged blackout, trading volume gradually recovered. This indicates that local users are quite resilient and can overcome stringent network restrictions. Over the course of a few weeks, more and more Iranian users found ways to bypass the blackout, possibly through channels like Starlink, leading to an increase in Bitcoin transactions. By the end of the second blackout, transaction volumes had recovered to over 75% of baseline levels.

Bitcoin Exiting from Iranian Personal Wallets

As restrictions were gradually lifted and networks restored at the end of May, transactions soared to nearly twice the baseline. The blackout did not eliminate Bitcoin trading; it merely temporarily suppressed trading demand.

The blackout only hinders the public from transferring crypto assets out of the country but does not prevent external funds from flowing in. During the blackout, external addresses could still transfer crypto assets to Iranian addresses. Nevertheless, data shows that during both blackouts, the pace of cross-border stablecoin inflows into Iran showed significant fluctuations: stablecoin inflows initially rose to about 150% of baseline levels, then dropped by about 80% after the blackout took effect; immediately after the restrictions were lifted, inflows rebounded. Only after external wallets confirmed that Iranian users could use their funds normally did stablecoin cross-border transfers stabilize.

A similar pattern emerged at the beginning of the US-Iran direct conflict, where cross-border stablecoin inflows once dropped by nearly 50%. However, unlike the sustained suppression caused by prolonged domestic blackouts, even during the blackout, the flow of cross-border funds to Iran gradually recovered and exceeded baseline levels. The ceasefire agreement on April 7 was a turning point, after which transaction volumes quickly rose above baseline levels.

Cross-Border Stablecoins Received by Iranian Personal Wallets

These trading characteristics illustrate how crypto users adapt to real-world crises. While cutting off the internet does affect the use of such "internet currencies," there are boundaries: assets can still be received.

Israeli Crypto Market

Amid the ongoing turmoil in the MENA region throughout the year, the Israeli crypto market has remained stable, growing only 0.7% year-on-year, making it one of the few markets globally that has neither significantly shrunk nor surged under the bear market's drag.

Changes in the Scale of the Israeli Crypto Economy

This $37.9 billion market is primarily driven by traders, with the vast majority of statistically recorded funds flowing into exchanges and other service platforms. The scale of peer-to-peer trading in the region is quite small, making it an exception, and cross-border capital flows are also limited and still in the developmental stage.

Noam Kaplan, a partner at KPMG Israel, stated, "Trading and investment remain the mainstream uses, but the industry is also exploring cross-border payments, DeFi, and various on-chain financial services."

Regulatory rules are also continuously improving. In the months following the end of the statistical period, Israeli financial regulators issued new regulations covering key provisions such as capital requirements for virtual asset service providers. This new regulation is expected to enhance the industry's resilience to risks.

Kaplan said, "These adjustments help bridge the Israeli crypto industry with the traditional financial system, promoting broader adoption."

Israel Still Dominated by Retail Investors

Ilan Sterk, CEO of Horizon, the crypto division of Israeli investment firm Altshuler Shaham, stated, "The Israeli crypto market is still dominated by retail investors, and the level of institutional adoption is still not on par with some leading international markets."

Transfer volume data also supports this. During the 2026 cycle, 98.4% of the single transaction amounts flowing into Israeli platforms were below $10,000, but these small amounts only accounted for 11% of the total value; single transactions over $1 million contributed 57% of the funds, totaling $21.3 billion. Funds handled by institutional platforms accounted for 10.8% of total inflows, down from a peak of 13.6% in 2025 but still higher than 5.6% in 2024.

2026 Cycle Inflows to Israeli Platforms by Transfer Amount

Israel and Stablecoins

In the past three reporting periods, the share of stablecoins in the inflow of funds on Israeli platforms has continued to rise: from 48.1% in 2024, 51.6% in 2025, to 57.0% in 2026. Ilan Sterk explains that this reflects the habits of Israeli retail investors, who buy stablecoins locally and then transfer them abroad to participate in trading opportunities not available locally.

"Stablecoins in Israel serve primarily as a bridge between the local crypto market and the global digital asset ecosystem," he said.

The vast majority of trades flow overseas. The local exchanges we track only account for 0.06% of the total inflow of Israeli stablecoins, with the rest going to overseas exchanges. Israeli users buy stablecoins, hold them, and then transfer them to overseas platforms, with very few transfers between users. The metric for measuring the activity of stablecoin circulation—the domestic turnover rate of stablecoins in Israel—is only 1.46, while the global average is 9.31.

Stablecoin circulation speed in Israel vs. globally

Sterk added, "A small portion of users have started using digital assets for actual financial needs, especially for payments and cross-border transfers. However, compared to investment trading, this type of non-trading scenario still accounts for a very low percentage."

Impact of the Iran Conflict on Israel's Crypto Industry

Israel is different from other countries covered in research: the conflict in 2026 did not bring about significant fluctuations in crypto trading. When the Iran conflict erupted in early 2026, the inflow of funds on Israeli platforms declined by 18.9% compared to the previous three months, slightly lower than the global decline of 23.6%; during the 12-day conflict in June 2025, the inflow in Israel dropped by 29.2%, while globally it only fell by 9.3%. Neither of these events replicated the surge seen after the events of October 2023—two months after that event, inflows on Israeli platforms surged by 96.9%, while globally they only increased by 16.3%, with Israel's share of inflows in the global crypto market rising by 68.9%. Since then, the average share has been 0.42%, compared to an average of 0.30% in the three months before October 2023.

The UAE experienced attacks, with users buying and holding tokenized gold during the peak of the conflict; Turkey, although far from the main battlefield, saw increased demand for tokenized gold due to a cash ban on gold. Both markets will adjust their trading behaviors in response to events. Israel has not seen such changes because the market adjustment was already completed after October 2023. By the time conflicts occurred in 2025 and 2026, local users had established a stable pattern: holding stablecoins, cross-chain transferring to overseas platforms, and waiting for regulatory maturity, without experiencing significant fluctuations with each round of conflict.

A Year Later: Four Different Market Directions

What is worth observing in the future is which of these market changes will solidify in the long term. The UAE's institutional crypto infrastructure development is leading the entire region, with its advantages in all statistical dimensions further widening in 2026; Turkish retail investors have steadily shifted to peer-to-peer trading, with licensing regulations continuously driving banks and licensed platforms to enter deeply; Israel's market adjustment was completed in October 2023, entering a stable state, and will no longer experience drastic fluctuations with each round of conflict.

A year later, this crypto landscape in the Middle East and North Africa is likely to look completely different, with its direction of change reflecting both the trends in the crypto market and the macro stability of the entire region.