War, Shutdowns, and Licensing Reshape MENA’s $443 Billion Crypto Economy

Summary

• MENA’s crypto economy was essentially flat at $443.3 billion in the 2026 reporting period, a 1.4% decline that tracks the global rate.
• The UAE’s crypto economy grew 32% to $104.8 billion, closing to 73% of Türkiye’s size and positioning the UAE to overtake Türkiye as MENA’s largest crypto economy as early as the 2027 period.
• Türkiye’s $144.5 billion crypto economy contracted modestly as its licensing transition reshaped the service side, while domestic peer-to-peer stablecoin volume grew fivefold to $3.56 billion.
• Iran’s crypto activity was shaped by two internet blackouts and the second Iran conflict, with bitcoin transactions falling as much as 90% during the acute phases but climbing back as users adapted.

The Middle East and North Africa spent the reporting period (July 2025 to June 2026) under a regional cloud of uncertainty, and crypto adoption reflects it in different ways. The Iran conflict that began on February 28, 2026, created cross-border pressure that touched every market we studied. On top of that sat market-specific stresses: an internet shutdown and crackdown in Iran and a licensing transition in Türkiye.

As our intro chapter showed, the 2026 bear market cut crypto’s total market cap in half but barely dented on-chain economic activity worldwide. MENA followed the same pattern. The region’s crypto economy slipped from $449.6 billion to $443.3 billion, a decline of 1.4% that tracks the global rate. Sixteen of 24 MENA markets with measurable data grew. The regional total was essentially flat because Türkiye and the UAE, which together make up 56% of the regional economy, moved in opposite directions and largely cancelled each other out. What shaped MENA was not the bear market itself but the regional disruptions layered on top of it.

What ties the regional story together is the encompassing pressure of geopolitical and economic uncertainty. When institutional capital looks for a durable regulated hub, it has concentrated in the UAE. When Türkiye’s exchange sector pauses to meet new licensing requirements, retail users bypass it and transact wallet-to-wallet. Each of these responses is specific to its market, but they are all responses to the same regional condition.

Türkiye’s $144.5 billion crypto economy is shifting from exchange-dominated to institutional

Türkiye was MENA’s largest crypto economy in the 2026 period at $144.5 billion, roughly a third of the entire region. Our overall measure captures value received across service inflows, domestic peer-to-peer, cross-border peer-to-peer, and cross-border business-to-person transfers. Türkiye’s total contracted modestly year over year, but the decline reflects a market in transition, not one in retreat. Activity moved off licensed services onto wallet-to-wallet rails, and institutional engagement from banks and licensed platforms deepened. The net effect is a smaller but structurally stronger market.

Right at the end of our study period, Türkiye began enforcing a new crypto industry regulatory regime that requires all Crypto Asset Service Providers (CASPs) in the country to hold licenses issued by the financial regulator SPK. Functionally, the country now requires CASPs to follow the same compliance protocols as financial institutions. The law “raised the operational bar for the whole industry,” said Burcu Küçükünal, CEO of Stablex, a Turkish exchange.

“Crypto in Türkiye is becoming part of traditional finance rather than a parallel system,” Küçükünal said.

Compliant exchanges are better-positioned to serve institutional demands under the new system, according to the experts we spoke to. For one, Turkish licensing criteria, operational rules, and capital requirements place the country’s crypto businesses in line with international standards, said Fatih Günaydın, General Manager at İş Digital Asset Technologies. That’s an important development for Türkiye and is likely to bolster growth among services.

“Offering equity and crypto asset services within the same financial group, with due regard to the relevant authorizations and separation of activities, is increasingly on the agenda,” said Salim Karaman, CEO of BtcTurk, Türkiye’s largest crypto exchange. “The key change over the past 12 months has been a shift from assessing interest and potential toward developing services and taking steps to enter the market within the regulatory framework.”

Türkiye’s $3.56 billion peer-to-peer economy has nowhere to go

Even with its maturing institutional landscape, Türkiye retains a flourishing grassroots crypto economy. Its peer-to-peer economy grew fivefold to hit $3.56 billion in the 2026 period, the largest in the region by far. Türkiye’s peer-to-peer crypto economy is nearly three times larger than the rest of MENA’s combined. Nearly all of that growth was in stablecoins.

While Türkiye has a sizable peer-to-peer market, that activity is not allowed to touch the real-world economy in ways we see elsewhere in the world.

“In Türkiye, the use of crypto assets for payments for goods and services is prohibited by regulation,” said Günaydın. “However, stablecoins feature in individuals’ savings, primarily due to the advantages of low spreads and ease of transfer. On the commercial and SME front, they are used to a limited extent in international trade, within the limits permitted by the laws of both countries.”

“Today, most activity is still about trading and protecting savings,” Küçükünal said. The appeal is straightforward: the U.S. dollar offers a stable store of value in a country where lira inflation has eroded household wealth for years, and dollar-pegged stablecoins put that stability in reach of anyone with a wallet. The same pattern shows up in other high-inflation markets around the world.

But the Central Bank of the Republic of Türkiye prohibits using crypto assets to pay for goods and services, so none of that $3.56 billion in domestic wallet-to-wallet volume is moving between buyers and sellers in the real economy. It is moving between Turkish wallets primarily as a dollar-denominated savings and transfer mechanism.

Küçükünal is explicit about the gap: “The strongest use cases for stablecoins in Türkiye are payments and money transfers, both domestic and cross-border, and these are not yet possible. A clear legal framework for stablecoin-based payments could grow demand well beyond trading.”

Changing regulations prompted surge in Türkiye’s tokenized gold markets

Despite their surging popularity, stablecoins are not the default savings instrument in Türkiye. That would be physical gold, the “traditional store of value” for Turkish households, as Küçükünal put it. Turkish society’s centuries-old attachment to gold sees residents literally stash the precious metal under their mattresses; the government estimates the population hoards 5,000 tons of gold.

In the 2026 period we began to see that trend move on-chain: Türkiye has become a world leader in the adoption of tokenized gold. Activity climbed from virtually zero in earlier reporting periods to nearly $1 billion in 2026. Küçükünal noticed a tokenized gold trading surge on Stablex: “Demand for tokenized gold shows that Turkish investors want familiar assets on new rails.”

One place Türkiye’s desire for gold appears is in exchange order book data. We looked at the popularity of buying tokenized gold with Turkish lira; we found that it was the second most popular currency for buying tokenized gold globally, behind only the U.S. dollar. In fact, a greater share of Turkish lira trading volume flowed into tokenized gold than any other currency with an order book above $100 million.

The rush came right as Türkiye’s Treasury and Finance Ministry changed its approach to gold. In January 2026, it announced a ban on purchasing physical gold (for example, jewelry and bars) using cash. The stated goal of the framework (called the Precious Metal Tracking System or KMTS) was curbing the informal economy and combating counterfeit gold.

The cash ban did not reduce demand for gold. It redirected it and put a new floor under tokenized gold volumes: Trading in tokenized gold began to boom immediately after KMTS was announced. In February, for example, trading hit $183.9 million, representing 2.51% of the entire lira book. Traders appeared to be moving ahead of the pending restrictions.Then, when the restrictions actually came online a few months later, the trading rush subsided, but notably at a higher baseline than before, creating a new volume floor for tokenized gold.

The government is already moving to formalize the trend. In July 2026, it issued new directives for trading digital precious metals in a regulated manner. This formalization will likely further boost the existing trend.

“With the implementation of clear regulations, the market is rapidly evolving from a structure based solely on transaction volume into a mature ecosystem focused on institutional products,” said Günaydın.

The UAE’s embrace of crypto businesses pays off

The United Arab Emirates has for years courted crypto business as part of a wider bid to diversify its historically oil-dependent economy. By leading on crypto regulation in particular, both the UAE could influence an emerging piece of global financial markets.

That successful diversification campaign helped the Emirates’ crypto economy grow in a time of uncertainty. Even as the Iran war brought regional conflict and slowed the Emirates’ broader economic growth, its crypto economy grew by 32% to reach $104.8 billion. In fact, excluding the UAE, the rest of MENA contracted 8.6% instead of 1.4%. “Whilst the war impacted other areas of the UAE like tourism and hospitality, the impact on the crypto industry has been limited,” said Henri Arslanian, co-founder of Nine Blocks Capital Management, the first crypto hedge fund to be licensed by Dubai’s crypto regulator VARA.

“Outside of the U.S., MENA and in particular the UAE has become the main hub for crypto firms’ global operations,” Arslanian added. He credits UAE financial regulators’ readiness to issue licenses as a catalyst for adoption; it “reduced in large part the career risk for any corporate executive in dealing with digital assets.”

“A year ago, the growth conversation here was about retail access,” said Laurent Girouille, Senior Executive Officer at Rain Trading Limited. “Today the questions we get are operational: who is the regulated counterparty, where are the assets held, how does settlement reconcile. Those come from treasuries, family offices and licensed intermediaries rather than from first-time buyers.”

The data reflect this. The UAE’s $102.3 billion services sector provided the vast majority of its cryptoeconomic growth in the 2026 period. Overall this category grew 29% period over period, with centralized exchange inflows growing 22%, to $55 billion, and institutional platforms (custodians and market-makers among them) growing 75% to reach $11.7 billion. Decentralized finance exchanges also saw over $31 billion in total inflows, up 31% over the prior period.

While the services sector was the UAE’s crypto juggernaut in raw economic terms, its far-smaller peer-to-peer economies grew even faster. Domestic P2P payments were up 786% period-over-period, and cross-border peer-to-peer inflows jumped 18-fold. Cross-border business payments also spiked nearly 400%, buoyed by a surge of major stablecoin transfers of $1 million or more.

“Many globally underestimate how much stablecoins are being used in B2B transactions” in the UAE, said Arslanian. “The UAE has become a global hub for such transactions.” He credited this to the UAE’s many regulated OTC brokers; they have “solid fiat offramps” that make moving out of crypto very easy for businesses.

“Stablecoins are increasingly being viewed as financial infrastructure rather than simply an asset used within crypto markets,” said a spokesperson for Fuze Finance. “We are seeing more interest in using them for cross-border settlement, corporate treasury, merchant payments and remittances.”

Together, the UAE’s fast-growing crypto economy is vaulting it toward the top of the region. It ended the 2026 period nearly three-quarters as large as Türkiye, MENA’s longtime leader. On current trajectories, the UAE’s crypto economy is on pace to surpass Türkiye in 2027.

“The UAE’s rise as a global crypto hub will be analyzed for years by other jurisdictions as an example of how to grab an opportunity,” said Arslanian.

How the Iran war affected crypto adoption in the UAE

While the Iran war did not stunt growth of the UAE’s crypto services sector, it did coincide with a change in investing behavior in the Emirates: a rise in holders in tokenized gold, and comparative fall among holders of bitcoin. As in Türkiye, where the KMTS cash ban redirected gold demand on-chain, the catalyst in the UAE was different but the pattern was the same: uncertainty pushed investors toward a familiar asset on new rails.

To be clear, bitcoin remains far more popular than tokenized gold in the UAE—and the world. They can both represent a form of “safe haven” asset in many cultures, as we saw in Türkiye most especially, that flourishes amid uncertainty. Gold “is a savings habit with centuries behind it,” said Girouille, the Rain executive. Indeed in March 2026, when the UAE first began getting targeted in Iranian attacks, the ranks of bitcoin holders and tokenized gold holders in the UAE both climbed.

But the twin trends diverged in the comparative quiet that followed. After a ceasefire declaration was broken, the relative share of tokenized gold holders kept climbing in the UAE. More people were buying tokenized gold than before. Comparatively, the number of bitcoin holders began to shrink. Investors who had bought bitcoin during the uncertainty of war were dumping it during the calm.

This stickiness may partly be due to the cultural perspective of gold in the region. It is less an asset to be traded than a savings instrument to be accumulated and held. Bitcoin may serve the same function elsewhere, but in the UAE the data suggests it did not during this period: investors bought it at the onset of conflict and sold it once the pressure eased. Gold holders held on.

A cash-for-gold ban accelerated Türkiye’s adoption of tokenized gold adoption; war influenced the UAE’s. The catalysts were different, but the outcome was the same: when regulated infrastructure exists for a familiar asset, demand finds a way.

In Iran, blackouts, bombs, and protests shape domestic adoption

Iran is both home to one of the world’s most robust crypto economies, and one that has been compromised by illicit use. For one, regular Iranians use assets like bitcoin and stablecoins to hedge persistent inflation and conduct their everyday lives. Against this, the Iranian regime uses crypto to evade sanctions and fund the Islamic Revolutionary Guard Corps (IRGC), and it relies on the country’s crypto sector to do it. For that reason, our analysis of grassroots crypto adoption in Iran focuses exclusively on the subset of in-country activity that we understand to be everyday use, not illicit behavior.

To begin, we looked at how Iran’s rolling internet blackouts impacted crypto usage in 2026. The government twice shut down regular Iranians’ digital link to the world: First, for 20 days in January following the eruption and suppression of economic protests; and second, for 88 days immediately following the start of the war. In both cases the blackouts severely inhibited Iranians’ ability to use crypto.

The chart below demonstrates the impact that turning off the internet had on internet-based money. Iranian bitcoin wallets made nearly 90% fewer bitcoin transactions in the first week of the first blackout than in our baseline period. Activity sprang back, eclipsing the baseline, as soon as the blackout lifted. Then one month later, when the war and the second blackout began, Iranian bitcoin transactions once again fell, this time by around 80%.

Critically, in neither instance did bitcoin activity within Iran fall to 0% of baseline. In fact, during the second, extended blackout, activity gradually climbed back. This is one indication of the domestic population’s resilience and ability to bypass even the most severe digital restrictions. Over the course of weeks more and more Iranians figured out ways to get around the blackout, perhaps through Starlink connections or other means. As they did so, they made more and more bitcoin transactions. By the end of the second blackout activity had returned to over 75% of baseline.

Then, when the restrictions began to be lifted in late May, and everyone had access once again, activity sprang upward to nearly double the baseline. Rather than crush bitcoin activity, the blackouts had bottled it up.

Internet blackouts only stop one from spending cryptocurrency within an unplugged country, not receiving it. Outsiders could still send crypto into Iran throughout the impacted periods. Even so, our analysis of transaction activity found that cross-border stablecoin flows into Iran shifted during both blackout periods.

Stablecoin transfers jumped to nearly 150% of baseline level. Then when the blackout took hold the cross-border flows dropped by around 80%. They rebounded immediately after the restrictions were lifted. As soon as the foreign wallets knew their Iranian counterparts could spend what they sent, they resumed the steady flow of stablecoins.

The acute conflict between the U.S. and Iran initially prompted similar behavior: cross-border stablecoin activity fell by nearly 50%. But unlike the longer run suppressive effect of the second domestic internet blackout, cross border inflows to Iran resumed, and surpassed their baseline, even during the course of the blackout. The ceasefire on April 7 was the pivot point. After that, activity quickly surpassed the baseline rate.

The activity patterns highlight how crypto-using populations adapt to real-world crises. Turning off the internet does stop people from using their internet money — but only to a point. They can still receive their crypto. And the longer a restriction stays in place, the more they will learn to bypass the blockade.

Israel’s crypto economy

Israel’s crypto economy held steady amid 12 months of turbulence in MENA, growing only 0.7% period-over-period. In fact, it was one of the few markets globally that neither contracted nor grew amid bear market’s drag.

Traders are driving this $37.9 billion story; the vast majority of activity we tracked were inflows into services, like exchanges. This is in line with what we heard from experts in Israel’s crypto scene. The country saw very limited peer-to-peer activity (making it an outlier in our region) and similarly negligible cross-border flows, both of which are still developing.

“While trading and investment remain the primary use cases, crypto is increasingly being explored for cross-border payments, decentralized finance, and blockchain-based financial services,” said Noam Kaplan, a partner at KPMG Israel.

Governing those future use-cases is an expanding rule book. In the months following our study period Israeli financial watchdogs issued regulations impacting stablecoins, token offerings, and, critically, capital requirements for virtual asset service providers. All of the new rules could help make the entire industry more resilient.

“These changes could help bridge the gap between Israel’s crypto industry and its traditional financial system, supporting broader adoption,” said Kaplan.

Israel remains a retail-driven crypto market

“The Israeli crypto market is still predominantly retail-driven,” said Ilan Sterk, CEO of Israeli investments firm Altshuler Shaham’s crypto wing, Horizon. “Israel has not yet reached the level of institutional adoption seen in some larger international markets.”

The transfer-size data corroborate this. In the 2026 period, 98.4% of Israeli transfers into services were under $10,000 but carried just 11% of the value. Transfers of $1 million or more carried 57% of the value, $21.3 billion. Institutional platforms took 10.8% of service inflows, down from a 2025 peak of 13.6% but still well above the 5.6% they held in 2024.

Israel and stablecoins

Stablecoins’ share of Israeli service inflows has risen in each of the past three reporting periods: from 48.1% in 2024 to 51.6% in 2025 to 57.0% in 2026. Their rising share reflects a tendency among Israel’s retail crypto base to buy locally and send internationally in pursuit of “trading opportunities that may not be available” in the country, said Sterk.

“In Israel, stablecoins are currently used primarily as a bridge between the local crypto market and the broader global digital asset ecosystem,” he said.

That international market captures the vast majority of Israeli activity. The one Israel-domiciled exchange we track took 0.06% of Israeli stablecoin service inflows, with the rest going abroad. Most Israeli stablecoin inflows go to offshore exchanges.

Israelis buy stablecoins, hold them, and send them to offshore exchanges, but they rarely transact with each other. Israel’s domestic stablecoin velocity, which measures how many times a year the stablecoins held in Israeli personal wallets turn over through peer-to-peer transfers, was 1.46 in the 2026 period against 9.31 for the world.

“A smaller but meaningful segment of Israeli users is using digital assets for practical financial purposes, particularly payments and cross-border transfers,” Sterk said. “These non-trading use cases still represent a relatively small share of the Israeli market compared with investment activity.”

How the Iran war shaped Israel’s crypto industry

What makes Israel different from the other MENA markets we studied is that the 2026 war produced no visible shift in its crypto activity. The early 2026 Iran war saw Israeli service inflows fall 18.9% against the three months before, slightly less than the world’s 23.6% drop. The 12-day war in June 2025 saw Israeli inflows fall 29.2% against the world’s 9.3%. Neither event came close to producing the kind of spike that followed October 7, 2023, when Israeli service inflows rose 96.9% in the two months after the attack while the world rose 16.3%, lifting Israel’s share of world service inflows by 68.9%. That share has averaged 0.42% in the three years since, against 0.30% in the three months before October 7.

In the UAE, where Iranian drone and missile strikes directly hit Emirati territory and disrupted economic activity, users responded by piling into tokenized gold during the acute phase of the conflict and continuing to accumulate it through the ceasefire. In Türkiye, a country far from the fighting but inside the regional pressure zone, the war coincided with the KMTS cash ban to incentivize users onto tokenized gold rails they had not been using before. Both markets adjusted their behavior in direct response to 2026’s events.

Israel did not, because the adjustment had already happened. By the time of the 2025 and 2026 conflicts, Israeli users were operating in a crypto market that had already absorbed the post-October 7 adjustment. The behavior that defines it now (holding stablecoins, bridging to offshore venues, waiting for regulated infrastructure to mature) does not swing with each new round of conflict in the way earlier adoption patterns would have.

Four responses to one year

FAQs

Which country has the largest cryptocurrency economy in the Middle East and North Africa in 2026?

Türkiye leads MENA with $144.5 billion in all-in crypto value received between July 2025 and June 2026, roughly a third of the entire region. The UAE ranks second at $104.8 billion, followed by Saudi Arabia at $50.5 billion, Israel at $37.9 billion, and Egypt at $18.8 billion. The UAE grew 32% while Türkiye contracted modestly, closing the UAE to 73% of Türkiye’s size and positioning it to potentially overtake Türkiye in the 2027 period.

Why is the UAE emerging as a global crypto hub?