The rise of crypto-assets in the MENA region

Born and raised in Jordan, Dina is the first and only female founder of a regulated and Sharia-compliant crypto-assets exchange globally. She has always been entrepreneurial at heart from a very young age and has since developed a very strong passion for crypto-assets and financial markets, strongly believing in their power to redefine the financial landscape.

As Dina worked on numerous projects and immersed herself fully in the latest industry developments, she has leveraged her innate knowledge of the region, local culture, and customers’ intricate needs to develop a better crypto-assets proposition. Dina founded CoinMENA to provide the region with this proposition and a platform that not only provides regulated, safe and convenient access to crypto-assets, but one that was built in the region, for the region.

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Why crypto-assets?

Crypto-assets and blockchain have gained tremendous prominence over the past decade. From a financial services industry perspective, the decentralized nature of blockchain has fundamentally changed the payments landscape and future delivery of products and services. Crypto-assets and their various applications are now at the heart of transforming the industry and other facets of the economy. Furthermore, owning crypto-assets allows individuals and institutions to partake in this new evolving and transformational industry that will soon form a key part of the new digital economy.

With the rise of blockchain and the growing appetite for crypto-assets as an alternative asset class, crypto-assets are being increasingly viewed as long-term and diversified investments that should be part of most individual and institutional portfolios. For skilled and professional investors, trading crypto-assets short-term can also be profitable. The crypto-assets market has a unique advantage over traditional asset classes, owing to its sizable and frequent price movements. For experienced traders that adopt the right strategy, trading on such price movements in liquid and established crypto-assets can be very profitable in the short-term.

The need for regulation

There have however been many instances where investors have lost either large sums of money or crypto-assets, as the exchange they trade on was neither regulated nor did it have the right corporate governance structure in place to ensure that investors’ funds and crypto-assets were safe. Additionally, there has been an influx of new crypto-assets in the market that, in many cases, remain unvetted, thus subjecting investors to abnormally high levels of risk. For instance, the vast majority of the thousands of crypto-assets that are backed by different blockchain projects, run a significant risk of failure. Investing in such crypto-assets can result in hefty losses for the investor. Furthermore, such unregulated exchanges have unreliable and unstable banking relationships, resulting in exorbitant fees and poor user experience for their investors.

A fully-regulated exchange ensures that it has all the necessary infrastructure and adequate corporate governance structure to operate and sustain operations. Every investor has to undergo a thorough KYC (Know Your Customer) check before being onboarded on the platform. Investor rights and assets are protected at all times, and the exchange enjoys strong banking relationships, which results in ease of access, increased stability, and more competitive fees. As an added measure, the exchange will undertake all the necessary due diligence on all the crypto-assets, choosing only those that are worthy and legitimate of investment.

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Misconceptions, trends, and opportunities

The crypto-assets industry is relatively new and nascent when compared to the traditional financial services sector. Consequently, it is an industry that is predominantly misunderstood and as such, seems intimidating. The misconceptions revolve around Bitcoin being the only crypto asset that matters or that crypto-assets are easy to hack or even that those investing in and utilizing crypto-assets are anonymous and untraceable. While Bitcoin might have the largest market share, there are other crypto-assets such as Ethereum that are gaining prominence. Crypto-assets are underpinned by blockchain technology, which ensures that they are incredibly secure and nearly impossible to hack. Additionally, the blockchain creates a digital trail of ownership that can be linked to real-life people, making it easier to trace than cash.

Given these gaps, building awareness around the fundamentals of the industry and the concept of crypto-assets, its applications, its transformational potential, as well as the know-how to access and start investing in it, will take time.

While the MENA region, in particular, has demonstrated an increased appetite and willingness to learn about crypto-assets and invest in them, making the industry mainstream will take some time. Regional and global jurisdictions and regulators have differing views on crypto-assets. This requires working with a number of regulators to develop an understanding and acceptance of it. At present, both Bahrain and the UAE are looking at crypto-assets extensively from a regulatory standpoint. This opens the door not only for retail investors to partake in this industry, but also institutions to both serve the industry and invest in it. As more regional regulators start embracing crypto-assets, we will start seeing more investments into the industry, in addition to it being used as an official form of payment.

On a global scale, we are already starting to see the widespread acknowledgment of the importance of this industry as more governments and investors, both retail and institutional, have started embracing it. This regulatory clarity and institutional uptake have propelled several companies to make crypto-assets part of their business model. For example, Mastercard has stated that it will start moving crypto-assets directly across its payments network. Similarly, BNY Mellon announced that it will start providing custody services for crypto-assets on the same platform used for traditional securities and cash. Moreover, Paypal is exploring crypto-assets as a funding source for purchases on its global merchant network. From an investment perspective, Tesla and Square have also announced significant investments into Bitcoin.

We can expect many others to follow suit, in what can be defined as the beginning of the crypto era.

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