Cryptocurrency has continued to increase in popularity since the first Bitcoin transaction in 2009. Like the stock of certain celebrities, the path to superstardom for crypto hasn’t always been a smooth one – the collapse of exchanges, in particular FTX, and uncertainties in regulation have kept it on the periphery for many.
But 2024 is going to be a big one for crypto and digital assets in the Middle East, especially in the UAE which has made giant strides to regulate the sector. So, what are the key things to look out for? Mo Ali Yusuf is the CEO of homegrown platform Fuze, which builds specialist infrastructure for crypto and digital assets.
He shared the top five things you need to know for the year ahead:
Crypto on the Middle East’s Banking Apps
Historically, banks have shied away from crypto. It’s been too complicated and too risky for them to invest in. It’s a bit like trying to explain the latest music or fashion trends to your parents. Banks aren’t native to crypto, so it’s taken quite a long road to get them on board. But now they understand it. We’re working with some of the biggest names to help them roll out crypto products directly through the banking apps we all use every day. Rather than having to sign up to third-party exchanges, you’ll have access to crypto investment in the same app you use to check your bank balance or transfer your football subs.
Stablecoins For Remittance And Payments
The UAE and Saudi Arabia are both in the top three for outbound remittances (only behind USA). Expats send money all over the world, typically through exchange houses. Through 2024 and beyond, more of those remittances will take place by stablecoin – a cryptocurrency that is pegged to a traditional asset (like the US dollar). The big advantage of stablecoins over traditional remittance, is speed – instead of waiting days for transfers to clear, transactions are nearly instantaneous, which is a huge advantage for people who need to send money back home to family. And, because stablecoin transactions involve fewer administrative steps, the cost benefits can be passed on to customers.
New Types of Investment
If you say the phrase ‘ETF’ to anybody in finance, they’ll immediately know what you’re talking about, but for others it might sound like the latest influencer embarking on a faux boxing career. Typically an ETF – or exchange-traded fund – is a mix of stocks or assets traded on a stock exchange. Essentially you get a diversified bundle, without having to pick individual stocks or bonds. The exciting news at the top of the year is that the SEC (US Securities And Exchange Commission) has approved Bitcoin ETFs. Huge institutions like Blackrock are already offering such ETFs, marking a new way to invest in cryptocurrency. It’s also expected that Ethereum (the second largest cryptocurrency behind Bitcoin) will also have ETFs by the end of the year.
Tokenization of real-world assets
What does a property, an artwork and a technology patent have in common? In 2024, their ownership might be represented as a ‘token’. These tokens are a digital representation of real assets, that are stored on a blockchain (a type of digital ledger that records transactions).
There are various reasons why this could be exciting. One, is that it will provide peace of mind when proving ownership of an item. An example could be a valuable collectible like a baseball card – you could receive a digital title of ownership to prove it’s authentic. Another smart thing about tokens is enabling fractional ownership. Imagine being able to own a small part of a famous artwork – instead of one person owning the entirety, it could be owned by many people simultaneously. We are already seeing a growing trend for fractional ownership of property in the UAE and Saudi Arabia and that is likely to continue in 2024.
Bitcoin ‘Halving’ Event
Arguably the most significant event in 2024 for the Middle East’s crypto enthusiasts and novices will be the ‘halving’ of Bitcoin.
To produce a new Bitcoin, crypto miners use powerful computers to solve puzzles. These cryptographic puzzles are essentially the way to verify and process transactions, and as a reward the crypto miners receive Bitcoin. In 2024, the amount of new Bitcoin entering the market will halve, creating further scarcity. Why does this matter? Well in the past, it’s caused the value of Bitcoin to rise. Of course, as with any investment there are no guarantees, but analysts are bullish.
For more information on crypto, digital assets and the future of finance, visit fuzefinance.com