As cryptocurrencies and the blockchain technology powering them gain traction around the world, the Middle East, which has many authoritarian regimes, is leading in supporting the adoption of these technologies. Yet the very foundation of this success is partly based on availing ways to evade control by centralized and authoritarian regimes.
A report authored by Chainalysis and released in October reveals that the volume of crypto transactions is on a upward trajectory in the Middle East in a way that beats every other region around the world. Turkey, which is experiencing the highest level of inflation on the globe, has banned cryptos, but data indicates that this country is registering the highest level of crypto transactions in the Middle East.
This contrast is understandable given that cryptos were created, in part, to provide an alternative to the “irresponsible” fiscal policies of governments, which end up victimizing ordinary citizens when currencies lose their value. Cryptocurrencies are cementing their place as a more trusted currency as compared to the official fiat currency issued by the Turkish government.
In Saudi Arabia, the crypto paradox is also playing out. While the government is actively seeking to regulate the blockchain and cryptocurrency industries, women, whose accounts are required to be tracked by male relatives, are increasingly turning to Bitcoin and other cryptos in order to make and receive payments without having their male family members superintending their finances.
Meanwhile, nearby Abu Dhabi, Bahrain and Dubai have gone out of their way to court crypto tech companies and talent in a bid to make those jurisdictions blockchain hubs. According to Alex Gladstein, who works at the Human Rights Foundation as a strategy officer, these Middle East countries have no problem supporting cryptocurrencies and blockchain technology as long as they can keep a close eye on them and control their use.
This support is yielding dividends. For example, Binance founder Changpeng Zhao has his operational base in Dubai, and he is a regular at blockchain conferences touting how authorities that cooperate with the industry are helping it to flourish within their jurisdictions. Given that more government aggression often results in more underground crypto activity and less aggression fosters overt industry growth, it is worthwhile for leading blockchain companies such as HIVE Blockchain Technologies Ltd. (NASDAQ: HIVE) (TSX.V: HIVE) to take the lead in engaging the authorities in different jurisdictions so that policies can be formulated in the spirit of collaboration rather than as a belligerent response to a technology that is growing at unexpected rates.
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