Bahrain Central Bank has announced the issuance of regulation for security tokens as amendments to its current crypto asset module.
The Central Bank has expanded the crypto asset regulations to include digital token offerings, in specific those with the characteristics of security tokens.
In determining whether a digital token qualifies as a security, the CBB will examine the underlying economic purpose of the digital token, its structure, characteristics, as well as the rights attached to the digital token.
The new amendments also outline new requirements to enhance safeguarding clients’ assets to provide high levels of protection for investors.
In addition the Central Bank of Bahrain will allow crypto-assets licensees (after obtaining the CBB’s approval) to engage in additional activities, which are not within the stipulated regulated crypto-asset services.
Commenting on the new amendments, Director of the Capital Markets Supervision Directorate – Mrs. Abeer Al Saad, stated, “We at the CBB are delighted to issue the new amendments to our regulatory framework for crypto-assets and to specifically introduce new regulatory requirements for the digital tokens offerings, in order to regulate the crypto-assets market in a fair and transparent manner. Therefore, the CBB has adopted a risk-based regulatory approach towards requirements, which are proportionate and commensurate to the regulated activity undertaken by a licensee. We endeavour to provide adequate safeguards to investors without inhibiting innovation adoption at the CBB, as we continue to monitor market trends and review the regulatory framework to keep up with the latest developments in the field, as well as maintain the competitiveness of the sector. This milestone is a reflection of the pioneering role the CBB continues to play in regulating crypto-assets.”
Bahrain was the first country in the GCC region to regulate crypto allowing for the launch of crypto exchange brokers such as RAIN, CoinMENA, and most recently Binance. It is also one of the leading GCC and MENA countries when it comes to crypto payments.
The new amendments are also a first in the region, no other country has regulated security tokens onshore yet!
MENA Tarabut Gateway, an open banking platform has partnered with Bahrain’s crypto trading platform RAIN to bring faster, cost effective fiat to crypto transactions to Bahrain users, allowing crypto payments directly from user bank accounts all on RAIN platform.
The new feature will utilize Tarabut Gateway’s open banking payment solutions to facilitate on and off-ramp (fiat-crypto-fiat) transfers for users, dramatically increasing speed and reducing errors associated with traditional bank wire transfers. The introduction of this new feature is in line with Rain’s strategy to provide the most premium and seamless crypto wallet experience for its MENA users.
Abdulla Almoayed, Founder and CEO of Tarabut Gateway, said, “We’re delighted to unveil a solution that aims to make fiat-to-crypto transfers quicker, more secure, and cost-effective – as well as enable such funding methods directly from bank accounts. Our partnership with Rain is a perfect cross-sector synergy, made possible by Bahrain’s advanced open banking ecosystem. Crypto trading, wallets, and other blockchain use cases are natural allies in opening up traditional banking and finance. We are proud to partner with Rain to provide a user-focused approach to crypto services by bringing the advantages of open banking digital solutions.”
Joseph Dallago, Chief Executive Officer of Rain, added, “Our partnership with Tarabut Gateway unlocks a new era for crypto assets adoption in the region. Through quick and efficient deposit mechanisms, crypto traders on Rain’s platform will now be able to seamlessly fund their accounts and capitalize on market movements. The integration with Tarabut Gateway cements Rain’s premium product offering in the region.”
Bahrain has been at the forefront of crypto payments in the region with examples of EazyPay and BinancePay partnership in Bahrain.
In 2021 Avanza Innovations was piloting its KYC banking solution in Pakistan, two years later, Pakistan Banks’ Association (PBA), on behalf of all its member banks, signed the project contract for the development and execution of Pakistan’s first, blockchain based, national eKYC banking platform with the Avanza Group.
Avanza Group’s eKYC platform, ‘Consonance’, is being implemented for PBA. The platform will use blockchain technology through which banks will be able to standardize and exchange, with customers’ consent, their details via a decentralized and self-regulated network. This will be a support platform for Pakistan’s banking industry and all participating member banks will be able to perform assessments of their existing, as well as new customers, by utilizing information/ data available with any other bank on ‘Consonance’.
In 2021 Avanza was piloting the EKYC blockchain enabled platform with three big banks. In an interview Waqas Mirza, Founder and CEO of Avanza Innovations notes, “ “We are launching the EKYC Blockchain enabled platform initially for three of the biggest banks in Pakistan under the auspices of Pakistan Banks Association (PBA) and in-line with the guidance of State Bank of Pakistan. The eventual goal is to roll out this National EKYC platform to all banking and financial institutions in Pakistan.”
He had noted at the time that it is always recommended to start with a pilot and limited number of participating entities before scaling.
In the latest announcement Mirza stated, “The Standardization and anomaly detection of Customer’ KYC details is just the first use case in this journey. In the future, the same platform can be enhanced to share Trade Finance related details, digital exchange and verification of banking documents, digital cheque clearing and many more. Avanza is very proud to implement the first building block of this multi-year journey that will greatly benefit the industry as well as end customers.”
Mentioning trade finance, digital cheque clearing is paramount because it is what put Avanza on the map in the UAE as well as Bahrain and other places.
Avanza had rolled out the National EKYC platform for BENEFIT in Bahrain back in 2021. At the time Mirza had stated that GCC region has been our best partner for experimenting and implementing blockchain solutions and now we are replicating these solutions in neighboring countries.
Avanza Group had started its blockchain projects in the UAE and GCC region. Avanza was the technology partner for UAE Trade Connect Project. Blockchain UAE Trade Connect platform, the UAE’s first trade finance platform to combat fraud has 11 UAE banks on its platform and was the UAE’s first commercialized solution to combat fraud in the trade finance space built on advanced technologies, namely blockchain and Artificial Intelligence (AI). UTC is a collaborative project of the banking industry and co-created with e& enterprise.
With the advent of the Invoice Factoring law recently published by the Federal Government of the UAE, the UTC blockchain platform was a key enabler for banks to increase lending to SMEs and allow corporates to borrow against their trade receivables.
In December 2021, the UAE Blockchain AI enabled UAE Trade Connect trade finance had processed 10 Billion AED (2.7 billion USD) worth of invoices during the first eight months of its operation. Etisalat Digital launched UTC trade Finance platform in April of 2021 alongside seven banks within the UAE.
In early 2022, Abu Dhabi Commercial Bank joined UTC platform as did Dubai Islamic Bank. At that time UTC had in total nine banks on its roster. The founding banks included First Abu Dhabi Bank (FAB), RAKBANK, Emirates NBD, Commercial Bank of Dubai, National Bank of Fujairah, Mashreq Bank, ADIB – Abu Dhabi Islamic Bank, and Commercial Bank International.
The experience and reputation Avanza gained from both projects in Bahrain and UAE spurred the growth to other countries and continents.
Avanza Innovations, part of Avanza Group has also worked with multiple other UAE governmental entities on Blockchain projects. Entities include DP World, Dubai Chamber of Commerce, Dubai Customs, RTA, Dubai Police and others.
Waqas Mirza, Founder and CEO of Avanza Innovations in an interview in 2021 mentioned the work Avanza was doing in Saudi Arabia. He discussed working on a Blockchain Invoice verification with a well renowned company. He at the time stated, “We have won a project as one of the subcontractors working on an invoice verification solution built on Hyperledger. The client is utilizing this solution to ensure seamless procurement and payment procedures with its suppliers.”
In conclusion, Avanza Innovations a UAE blockchain solution provider has used UAE’s Blockchain strategy and commitment to innovation to grow well beyond its roots. This is a lesson to many blockchain and crypto entities that are setting up in UAE, the limits are endless.
While Binance Pay with its partner in Bahrain is breaking records with new clients accepting crypto payments using the platform, in other places, like the UAE it is losing clients. The issue could be regulatory more than technical.
So last week, Novotel Bahrain Al Dana Resort became the first hotel in the region to accept crypto payments via EazyPay & Binance Pay, while UAE’s Dubai Canadian University seems to have changed its stance and is no longer willing to accept crypto payments. This also seems to be the same situation with UAE Emirates Zone Investment Services which has also announced a partnership, but no longer mentions this prominently on their website or in their tweets. While it still mentions it in their news section.
So back to Bahrain, Eazy Financial Services “EazyPay”, Bahrain’s payment services provider signed a payment services agreement with Novotel Bahrain Al Dana Resort, a luxury 4-star beachside hotel in Manama to offer crypto asset payments to its clients via Binance Pay application which is regulated by the Central Bank of Bahrain.
Novotel Bahrain Al Dana Resort’s General Manager, Mr. Amid Yazji commented: “Keeping up with the development of technologies, and our constant desire to provide our valued guests with the highest levels of service, we are thrilled to announce that we are the first hotel in the Kingdom of Bahrain and the region to use the latest digital payment technologies in partnership with Eazy Financial Services “EazyPay”
This is neither the first nor the last client in Bahrain to sign up. Over the past few months EazyPay has signed up an array of clients utilizing its partnership with Binance Pay. Bahrain real estate developer Bin Faqeeh Real estate Investment Company announced that clients could apartments or houses using cryptocurrencies using EazyPay’s POS terminals.
Even stc Bahrain has become the first telecom operator in Bahrain to accept cryptocurrencies through its partnership with Eazy Financial Services, a leading Bahraini Payment Services provider specializing in POS and online payment gateway. EazyPay uses BinancePay and wallet to offer this service to more than 5000 POS terminals in Bahrain.
While in the UAE, in January 2023, UAE Emirates Zone Investment Services announced it had partnered with Binance Pay, to accept crypto payments from the UAE start-up community, small and medium businesses (SMBs), Investors and Entrepreneurs who are planning to set up companies in the region. At the time, the service was prominently mentioned on the first page of their website and in their tweets. Yet now no tweet is visible on the matter and the only reference to the partnership is in their news section of their website.
Furthermore, another UAE client who had announced that they would be accepting cryptocurrencies with Binance Pay has since then retracted their statement. UAE’s Canadian University in Dubai had announced that it was accepting crypto payments through Binance Pay. In a twitter post the Canadian University Dubai announced that it had collaborated with Binance Pay to offer crypto as a payment method. According to the post students of Canadian University Dubai can use Binance Pay to pay their fees.
But then a few days later, in another tweet the Canadian University of Dubai stated, “Dear CUD Community, for technical reasons, CUD will not be accepting cryptocurrency as a method of payment, until further notice. We apologize for any inconvenience.”
It seems weird to have technical issues after the fact, as most entities try and test the service and ensure there are no technical issues before making announcements.
Could there be another reason for the sudden retraction? Could there have been regulatory restraints perhaps? One person commented on the Dubai Canadian University tweet saying, “Lies, you backed down because of pressure from gov. Paying in USDC or crypto is one of the easiest and cheapest ways to send value across the world with perfect and complete settlement.” While other tweet replies bashed Binance.
Whatever the reason it would seem that Binance while winning many clients to its Binance Pay platform, has also lost some especially in the UAE!
LaraotheBlock reached out to Binance spokesperson and is awaiting their comments. If comments are made this article will be updated.
LaraontheBlock also tried calling Emirates Investment Zone services but to no avail.
In January 2023 Binance celebrated its official entrance into Bahrain. Bahrain’s crypto ecosystem has flourished with the entrance of Binance. Bahrain has witnessed a growth on all fronts, crypto exchange users, crypto payments, crypto jobs and competitive crypto offerings. Binance received its official license in October 2022.
Growth of crypto exchange users
The official license and launch of Binance in Bahrain has added to Binance’s crypto exchange users.
Binance announced that it witnessed a 34% growth in institutional business clients in MENA in Q4 2022, the highest growth for a region where Binance operates, Nadeem Ladki, Executive Director Head of BD & Partnerships, Europe & MENA at Binance told LaraontheBlock, “While I cannot go into the specific growth in Bahrain, I can confirm that we have seen a growth in users since we officially launched in October 2022.”
Even Bahrain based CoinMENA; crypto broker also saw an increase in its user base in 2022 including the period since Binance made its foray into the country. Talal Tabaa CEO and Founder of CoinMENA explained to LaraontheBlock, “Year on Year from December 2021 until December 2022, the verified users of CoinMENA from Bahrain grew by 143 percent. In specific since the entrance of Binance in October 2022, CoinMENA witnessed 5.6 percent growth up until January 2023.”
Growth Crypto vis vie Banking services
In addition to the increase in the number of newly on boarded crypto exchange clients, the country has seen more robust competitive marketing campaigns, with lower fees aimed at attracting a bigger user base as well as enhanced banking crypto relationships.
Binance holds a Category 4 license as a crypto asset service provider (CASP) and was the first exchange in the country to be granted a category four license. This meant that users could access Binance’s full range of crypto asset exchange services, including direct deposits and withdrawals in local currencies.
Yet this did not faze CoinMENA which despite being a crypto broker still espouses good relationships with liquidity partners and banks. Talal Tabbaa, CEO of CoinMENA told LaraontheBlock, “Compared to other regions, the MENA market is one of the smallest. CoinMENA, Rain & BitOasis are technically all brokerage firms. We all have to work with global liquidity partners to place trades on behalf of our users. CoinMENA can list tokens at its own discretion following the Board of Directors’ approval, but they must comply with CBB guidelines.”
After Binance entered Bahrain and in early 2023, CoinMENA announced that users could now easily deposit and withdraw crypto through bank transfers or cards in just 24 hours. CoinMENA CEO explains, “We maintain good banking relationships which is crucial to ensure the on-ramp and off-ramp services are as frictionless as possible for our users.”
RAIN crypto broker which similar to CoinMENA has a category three license in Bahrain has on some occasions compared its offering with Binance. In a tweet by one of its founders AJ Nelson in late October in reply to a comment from a client stated, “Yes we are well aware of the problems with bank transfers. We are working directly with regulators to solve. In good time we will have a solution regarding fees, have you used Rain Pro? It has 0 maker fees and tight spreads. Lower fees and pricing than Binance.”
More Competitive Marketing Campaigns lower fees
In terms of marketing campaigns to introduce better services at lower cost, Binance for its launch campaign offered 25% discount on all trading fees for Bahrain users through a link ‘ BHLive’.
In addition Binance offered the Binance Bahrain Card allowing Bahrain clients to spend cryptocurrencies in over 60 million online and physical stores.
Furthermore in December as part of its Christmas offering, Binance offered its Arabic speaking clients’ rewards reaching $1.5 million in addition to promotions. As it noted on its twitter page Binance offers 350+ crypto assets with fees of less than 0.10 percent per transaction.
CoinMENA quickly countered these marketing campaigns with those of its own. For example in January 2023, CoinMENA offered discounted card deposit fees for 48 hours again after doing so in late 2022.
As per the advert, users would pay only 2% fee on card deposits instead of 3.5%. For Bahrain’s National Day celebrations, CoinMENA offered zero trading fees for a limited time of 48 hours. The crypto exchange had also promoted prior to that a 23% off on trading fees for a specified time period.
CoinMENA offers around 30 crypto assets for trading with fees of 0.75%.
Tabaa confirms that the entrance of Binance helped to grow the crypto ecosystem in Bahrain. He stated, “Binance spends a lot on crypto marketing and this actually benefits the entire ecosystem of players.”
Growth of Crypto Payments
Crypto as a method of payment has also seen significant growth since the entrance of Binance in Bahrain. Binance partnered with EazyPay, a financial payment service provider which has a network of thousands of merchants and over 6000 terminals, to offer crypto as a method of payment while settling transactions with merchants in fiat currency.
According to Nayef Tawfiq Al Alawi, Managing Director and CEO of EazyPay, “As a regulated entity we can only work with regulated entities such as Binance. Since our partnership merchants have been more confident to get into the crypto payment scene and in terms of transactions, while people are still testing the service on average we transact $5000 worth of crypto transaction per day over 6000 terminals in Bahrain. This is really good.”
It hasn’t stopped there, In November 2022 just after Binance entered Bahrain, CoinMENA partnered with Carlton Real Estate, a Bahrain-based real estate agency that allows investors in the Kingdom to purchase real estate property using crypto assets. Under the partnership, the real estate broker would accept stablecoins like USDT and USDC.
This only exemplifies the increase in crypto as a method of payment in the country.
Growth in crypto Job market
Binance has viewed Bahrain as a key business hub which will provide areas for growth and employment within the wider industry. Currently Binance has employed 200 people in Bahrain and is continuing to hire. It has job posts for Customer Support Specialist, Senior Treasury Manager and others in Bahrain.
Even RAIN which decreased its employee base by 50% still has around 200 employees while CoinMENA has around16 employees and is also currently hiring with job openings for software engineer in January 2023 as well others.
Conclusion
Changpeng Zhao CZ in a recent tweet stated, “Bahrain is a hidden gem, super safe, very clean, well developed, good food, superb service, nice people and crypto friendly!”
While CoinMENA affirms that it has known that international players would be entering the region given the poor financial services, high fees and large unbanked population coupled with young demographic population and high smartphone penetration. To him this only shows the market is maturing and accelerating growth.
Binance in 2022, processed a whopping $65 billion in trading volume on average every day, at a speed of approximately 0.7 million transactions per second. The entrance of Binance into markets such as Bahrain has for sure added to the growth of the crypto market and ecosystem.
Recently a press release came out discussing the launch of the Gulf Crypto bank which is espoused to be an integrated banking system for both fiat currencies and digital currencies.
As per the release users can withdraw, deposit, swap, do external and internal transfers immediately, securely and with minimal fees. Users will also be provided with a visa or mastercard that can be used at any ATM or online. Another noteworthy feature is the ability to withdraw crypto assets to any external wallet by creating a wallet inside your bank account. The Bank will also offer personal and corporate loans based on the Islamic laws.
They state that they are participating in the Fintech Crypto Summit in Bahrain as a diamond sponsor and are seeking investment for their coin, GulfCoin. The only summit being mentioned in Bahrain on February 15th is the Fintech and Crypto Summit. Their website doesn’t mention any speakers or sponsors and the event is supposedly only two weeks away!
Looking further into their whitepaper they claim that they are licensed and registered in England, Georgia, Estonia, UAE and Singapore! As they state “Indeed, it is an actual bank project with all the licenses and capital officially registered in England. The Gulf Crypto Bank is registered and licensed in all countries that allow the exchange and circulation of cryptocurrency, such as Georgia, Estonia, the United Arab Emirates, and Singapore.”
Red signs, first they are definitely not regulated in the UAE because the UAE has not regulated crypto banks as of yet! Secondly in their whitepaper and on their website there are no mentioning of who the team members are which is a big red flag! Finally they don’t have any social media channels! But most importantly where are their financials for this project!?
There is another GulfCoin project that also seems iffy. The CEO of that project is Hani Asfar. Yet even this project has the last dated press release as March 2022. In an interview he notes that GulfCoin is being used in 500 locations in the UAE! As stated in the article Asfar says, “Speaking specifically of Dubai, there will be more than 500 locations where token holders can spend Gulf Coin. Plans are underway to make Gulf Coin available in other countries very soon.”
Always do your research because scammers are everywhere! Just because they can pay for a press release or a story on a media outlet does not mean they are legit. Plus just because they say they are licensed in certain countries does not mean they are. Check the licensing authorities ask around.
Bahrain real estate developer Bin Faqeeh Real estate Investment Company announced that clients can buy apartments or houses using cryptocurrencies. Bin Faqeeh will be offering crypto payment services with Bahrain financial service provider EazyPay POS terminals.
Binance Co-Founder and CEO, Changpeng Zhao tweeted about Bin Faqeeh Real Estate Company accepting Crypto Payments via Binance Pay through Eazy Financial Services. EazyPay and Binance had signed a partnership in Q4 2022 to offer crypto payment services to EazyPay’s 5000 plus POS terminals.
Prior to this Bahrain CoinMENA crypto broker partnered with Carlton Real Estate, a Bahrain-based real estate agency, allowing clients to buy real estate property using crypto assets. Under the partnership, Carlton real estate would accept stablecoins like USDT and USDC.
The UAE as well has been offering clients the ability to pay for real estate in cryptocurrencies. In May 2022 UAE Properties developer Nakheel and Abu Dhabi based crypto exchange Hayvn partnered to offer crypto payment options for Nakheel clients. Nakheel clients are able to pay for their rent, service fee, and real estate purchases in cryptocurrency.
Other real estate developers in UAE also are offering crypto payment services, such as DAMAC, SAMENA developers and more. In March UAE based Real estate and industry experts estimated that crypto payments for Dubai real estate increased by 300 percent in 2022. Majority of buyers are using stablecoins such as Tether, USDT as well as Bitcoin and Ethereum.
Even UAE Property Consultancy firm, Your place partnered with Utrust, a cryptocurrency payment solution designed to modernize the finance and payments industry offers clients the ability to pay for properties in Dubai UAE using cryptocurrencies. Recently Utrust is now enabling crypto payments for luxury hotels in the UAE. BM Hotels & Resorts luxury hotel chain is accepting digital currencies using Utrust.
In a recent survey entitled “MENA Investor Survey 2022-2023 for crypto Blockchain sector” carried out by laraontheblock with 83 MENA venture capitalists, fund managers, and family offices, 50% of those surveyed stated they will be allocating more funds to blockchain and crypto projects and entities in 2023. 19% of those surveyed stated in 2022 they had invested more than 50% of allocated capital and funds into crypto and Blockchain projects.
The findings of the “MENA Investor Survey 2022-2023 for crypto Blockchain sector” sheds light on the different areas of interest for MENA investors which will give startups and entities a better view on whom and where capital will be heading by investors in the MENA region.
This comes as cryptocurrency adoption has skyrocketed in the Middle East and North Africa (MENA) region. According to a survey by blockchain analytics platform Chainalysis, MENA countries have the fastest-growing cryptocurrency industry in the world, accounting for 9.2% of global digital currency transactions from July 2021 to June 2022.
Vast Majority of MENA VCs invested in crypto and Blockchain in 2022
75% of survey respondents confirmed that they invested in crypto and blockchain entities in 2022, while only 25% stated they hadn’t. The MENA region has become the center for crypto trading, investing and regulation. The UAE led crypto regulation in 2022 and was the first country in the region to launch a blockchain strategy back in 2017.
The stance taken by MENA investors in the survey is in line with global figures. In 2022, despite the slowdown in crypto VC funding, it exceeded the figure for 2021. Cointelegraph Research’s VC Database showed that a total of $36.1 billion was raised in 2022. This is in contrast to the $30.3 billion worth of funding in 2021.
Crypto projects globally attracted $19.9 billion in venture capital (VC) investments in the first nine months of 2022, 41% higher than a year ago, according to Pitchbook data.
Crypto and Blockchain entities are the Future
54% of respondents replied that they invested in crypto and Blockchain entities because it is the future, while 42% stated it was because these technologies solve real business problems. Only 18% believed that it was because while risky the return on investment was high. ( note that more than one response for some respondents
The MENA region witnessed sizable investments in crypto and Blockchain entities in 2022. For example crypto exchange RAIN received $110 million in investments and included investors from MENA such as MEVP. BitOasis also raised $30 million with UAE based Wamda Capital and others.
Significant developments in the UAE such as the launch of Dubai’s Virtual Assets Regulatory Authority (VARA), and the announcement of the Dubai metaverse strategy, which aims to attract more than 1,000 blockchain and metaverse companies as well as support more than 40,000 virtual jobs by 2030 has also played a role in enticing investors towards blockchain, crypto and metaverse as did the launch of Crypto Oasis ecosystem and the DMCC crypto center bringing in 1400 crypto and Blockchain entities to the
19% of surveyed spent over 50% of their capital on Blockchain and crypto entities
Interestingly when asked what percentage of capital or funds available in 2022 was invested in crypto and blockchain, a whopping 19 percent stated that they had invested more than 50 percent of funds into crypto and Blockchain entities. While the majority 33% invested between 5-15% of their capital into crypto and blockchain entities.
27% invested between 1-5 percent of their capital into crypto and Blockchain, while 21% invested less than 1%.
While the percentages maybe small compared to other areas, Nickel Digital Asset Management noted that UAE institutional investors, family offices, and wealth managers plan to increase their exposure to crypto dramatically by 2023. And while sovereign funds do not yet see digital assets as investable with just 7% of global sovereign investors have any exposure to digital assets through investments in blockchain companies, this is changing.
In May 2022, J.P. Morgan’s global investment strategy outlook elevated digital assets as the preferred alternative asset class alongside hedge funds for 2022. For the first time in history digital assets displaced other alternative strategies. In the report it is noted that digital assets are expected to offer the greatest potential for generating alpha and hedge funds expect as much as 10 percent of their strategy to include crypto.
A PWC Global Crypto Hedge Fund report in August 2022, found that more than a third of traditional hedge funds now invest in digital assets, this was double the figure of 2021
Global crypto leader at PWC left his role to set up a $75 million digital assets fund Nine Blocks Capital in Dubai UAE. Henri Arsalanian, founder noted that it was Dubai’s crypto openness that influenced his decision.
Majority of MENA Investors invested in Blockchain infrastructure
MENA investors surveyed were asked where they allocated funds in 2022. 64% of respondents stated that capital was invested in Blockchain infrastructure projects. Following Blockchain infrastructure was DeFi. 38% of respondents stated they allocated funds to DeFi projects. Equally 33-36% invested in metaverse and crypto assets.
In addition 22% replied they invested in Non-Fungible tokens or NFT projects, while 17-18% of respondents stated investments went into e-gaming, tokenization projects, crypto mining and blockchain crypto payments.
Only 8% stated they invested in decentralized messaging and social media platforms.
The findings of the survey fall much in line with Cointelegraph’ s recent blockchain funding VC report which found that blockchain Infrastructure projects took half the pot of investments in November 2022. While the Web3 sector saw the most deals closed. The global blockchain infrastructure sector secured $483.9 million in venture capital in 2022.
According to Galaxy Ventures, Crypto and Blockchain sector saw $5.5 billion of venture capital invested in Q3 2022 through 518 deals. Despite the QoQ (quarter on quarter) decrease, the $5.5 billion invested in Q3 is $2 billion greater than the 7-year average of $3.1 billion and more than $2 billion higher than the 2020 peak.
MENA investors will invest more in 2023
51% of those surveyed stated they would allocate more funds to blockchain and crypto entities in 2023. Only 15% replied they would not. In addition 33% were unsure. This means that potentially 84% of those surveyed could be investing more in blockchain and crypto in 2023.
Already investment companies such as TradeDog Group, the parent company of TD VC, have launched new funds. TradeDg Group launched their $100 Million Web3 blockchain special situation fund. The fund will re-structure and invest in projects with good products and businesses but struggling token markets.
Even UAE Cypher Capital VC announced in December 2022 the launch of a new $200 million fund which will focus on infrastructure and middleware investments in Web3. At the time they had invested in Rekt Studios and Fenix Games, while UAE Shorooq Partners also announced in March 2022 that they would be investing $150 million in Web3 startups. Many other investors across the MENA region have been following suite including Mubadala and G42 both based out of UAE.
Global players such as Goldman Sachs plans to spend tens of millions of dollars to buy or invest in crypto companies after the collapse of the FTX exchange hit valuations and dampened investor interest. Goldman has invested in 11 digital asset companies that provide services such as compliance, cryptocurrency data and blockchain management.
MENA investors view Blockchain infrastructure as biggest growth sector in 2023
According to 29% of survey respondents, Blockchain infrastructure projects will witness the biggest growth in 2023. Data gathered by BuyShares.co.nz, found that the global spending on blockchain solutions is expected to surge by 235% and reach $14.4bn by 2023.
Following, 21% view metaverse projects as high growth sector technology. This is in line with findings from Grand View Research, which states the global metaverse market is forecast to grow at a compound annual growth rate (CAGR) of 39.4% from 2022 to 2030.
Meanwhile 18% of those surveyed think DeFi will witness strong growth. DeFi has been the largest market cap activity within Web3, with a peak total value locked (TVL) of over $175 billion in 2021 shrinking to $39 billion in 2022. Yet Digital asset research firm Reflexivity Research in its recently published 2022 Annual Year in Review / Forward Outlook 2023 believes that given the blow to trust in CEXs, investors will be drawn to decentralized alternatives. The report believes DeFi TVL could make its way back to $75 billion or $100 billion.
12% of those surveyed view blockchain and crypto payments as one of the growth sectors for 2023. Cross-border payments and settlements are considered the most prominent blockchain use case. According to the IDC Worldwide Blockchain Spending Guide, Blockchain enabled cross border payments accounted for 15.9% of the $4.67-billion blockchain market in 2021. Juniper Research estimates that B2B cross-border payments on blockchain will account for 11% of the total B2B international payments by 2024.
When it comes to investment in tokenization projects 8% of those surveyed believe that tokenization sector will be a growth sector in 2023. 5% of those surveyed believe NFT sector will grow in 2023, only 3% of those surveyed believe crypto mining will be a growth sector.
Conclusion
In conclusion from the responses of 83 VCs, investment funds, across the MENA region that included names such as Oman Investment Authority, Equinox, Synaptech Capital, CypherCapital, Helion Ventures, Carter Capital, AlIImtiaz Investment Group, True Global Ventures, Roshan Investments, Crypto Oasis, Ghaf Capital Investments, Vault Investments, and many more, the reflection is a positive outlook when it comes to crypto and Blockchain and a growing interest in investing in projects. So while 2022 might have been one of the toughest years on crypto and Blockchain, it has not killed the appetite of investors in MENA!
Ericssonand Bahrain telecom operator, Batelco, part of the Beyon Group, have deployed Blockchain enabled Ericsson Customer Acceptance platform. As per the press release, the customer acceptance platform isan enterprise blockchain solution for the automated collection of acceptance records upon fulfilment of agreed project deliverables. Batelco is the first telecommunication service provider to deploy the solution.
Ericsson Customer Acceptance (ECA) provides significant and impactful results to the customer acceptance process. It reduces the time spent on acceptance-related activities per site by up to 42 percent, thereby achieving faster time-to-market with accuracy. ECA also simplifies the process by providing a single interface for submitting and approving acceptance documents and displaying real-time status of every acceptance item submitted to the platform. Combined with other services and software capabilities, ECA also helps reduce CO2 emissions by removing the need for on-site customer visits to complete the acceptance process.
Batelco General Manager Technology Rashed Mohamed stated, ” Batelco is at the forefront of technological innovation, constantly seeking new ways to attain efficiency and effectiveness. We are proud to be the first telecommunication service provider to deploy the Ericsson Customer Acceptance platform. Within a short period of time, we have witnessed the benefits of deploying it. By simplifying our daily activities and achieving quicker installations and project completions, we can bring the latest technologies to our customers more efficiently.. We commend Ericsson for constantly offering new technological solutions that benefit the operations of their customers.”
Apart from enabling site quality assurance and improving the acceptance flow, blockchain secures the integrity of acceptance documentation and enables transparency and traceability between the parties involved.
Nicolas Blixell, Vice President, and Head of Ericsson GCC at Ericsson, added, “The Ericsson Customer Acceptance solution aims to provide speed, accuracy, sustainability, and efficiency to the operations between Ericsson and our customers. It strengthens trust, adds immutability and security, and provides full traceability end-to-end. Deploying the Ericsson Customer Acceptance solution with Batelco has demonstrated the benefits and efficiencies that can be achieved in a quick, secure, and resourceful manner. We look forward to future implementations of this blockchain-based solution to drive innovation and customer satisfaction. “
Fasset digital asset exchange has appointed the former CEO of Bahrain Fintech Bay as General Manager for MENA region. Fasset digital asset exchange seeks to empower the next billion with new ways to own connect and share digital assets.
Khalid brings a track record of success as the former CEO and board member of Bahrain FinTech Bay, where he led the development and growth of Bahrain FinTech Bay into a leading fintech hub in the Middle East. Prior to his appointment, Khalid held various leadership positions in the financial services industry, focused on investment banking, market risk management and technology, where he was previously Vice President at J.P. Morgan and Barclays Capital in London.
Fasset announced a partnership with Mastercard, which has chosen the company for its Start Path program to promote the adoption of crypto and blockchain technology, the firm announced on Nov. 3.
“We are thrilled to welcome Khalid to the Fasset team and are confident that his experience and leadership will be invaluable as we continue to drive innovation and growth in the digital asset space” said Daniel Ahmed, COO, Fasset.
Khalid added, “I am thrilled to be joining Fasset at this pivotal time in the evolution of finance through digital assets. I look forward to driving our vision and building out the web3 ecosystem by creating opportunities for digital asset ownership, utilization, and ultimately empowering the region..”
