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Will cryptocurrencies become the equivalent of gold in the Gulf?
The cryptocurrency markets in the Gulf are witnessing a number of significant developments, reflecting the region's rapidly evolving landscape of regulatory expansion, new institutional experiments, and diverse public engagement. This has brought to the forefront the phenomenon of what has become known as "digital gold" in the GCC countries. In Abu Dhabi, on September 4th, the GFO-X platform received preliminary approval from the Financial Regulatory Authority (FSRA) of the Abu Dhabi Global Market to operate as a digital derivatives trading platform. This positions the UAE capital as a regional hub for institutional-grade digital assets and reflects its determination to attract institutional investment in the cryptocurrency sector, according to an assessment published by Financial News.
This trend comes within a broader context adopted by the UAE to consolidate its position as an incubator for the cryptocurrency industry, especially after the recent steps related to regulating stablecoins and issuing the first dirham-backed stablecoin in cooperation between major financial institutions, such as Abu Dhabi Holding and First Abu Dhabi Bank, in a move aimed at linking digital transactions to the local economy and enhancing confidence in digital payments, according to a report published by CoinLaw, a platform specializing in financial and cryptocurrency analysis and statistics.
The report considered the UAE's development as part of a broader Gulf trend, which included Bahrain's move in the same direction by establishing a regulatory framework for stablecoins through a new regulatory unit (SIO Module) at the Central Bank of Bahrain. This enhances Manama's competitiveness as a regional player in providing a clear legal environment for virtual assets. A different aspect of the situation emerged in Kuwait last May when official campaigns against illegal cryptocurrency mining activities resulted in a reduction of electricity consumption in the Al-Wafra area, where anti-mining campaigns were conducted, by more than 55%. This development revealed the extent of the popularity of digital currency markets among the Gulf country's youth, despite the ban on mining activity, according to a Reuters report.
As for the daily activities of individuals, the report's figures in the UAE reflected the continued rise in the use of cryptocurrency applications, with downloads jumping from approximately 6.2 million in 2023 to 15 million in 2024. This indicates the growing prevalence of digital trading and investment among young people. While the UAE continues to develop a regulated and attractive digital market, and Bahrain is working to strengthen its legislative environment, these developments collectively paint a clear picture of a new phase the region is entering. Discussions about cryptocurrencies are no longer limited to individual initiatives but have become an integral part of the economic policies and strategies adopted by major Gulf capitals.
Increase in market value
In this context, Yasin Acar, a member of the International Association for Economic Policy Research and a professor of public finance at Bilecik Şeyh Edebali University in Turkey, told Al-Araby Al-Jadeed that the continued high price of digital currencies (such as Bitcoin, which is priced at $111,000) indicates that significant groups are reconsidering their view of the market for these currencies, which has led to the activation of the debate about their impact on traditional financial behavior, especially in Gulf societies.
The rapid growth of this sector has made digital currencies an increasingly important element in the global financial system, with the total market value of thousands of cryptocurrencies reaching about $4 trillion, according to Ajar. He noted that citizens of the Gulf countries used to keep their money in traditional savings instruments, such as gold, real estate, bank deposits and bonds, in order to secure their financial future, but over the past decade, digital currencies, especially Bitcoin, have strongly entered the savings portfolio.
In light of this, the term “digital gold” has become a way to describe digital currencies in the Gulf countries, given their similarity to gold “in terms of their scarcity, resistance to inflation, and ability to preserve value,” according to Ajar, noting that these assets are widely accepted, especially among young people, who see them as an alternative and decentralized digital means that aligns with their technological aspirations and their rejection of centralized financial systems.
In this context, Ajar points to the frequent observation of the accelerating pace of adoption of blockchain technology, with its adoption rate growing by 70% annually, reflecting increasing confidence in this technology as a safe, transparent and effective financial solution. He notes that employing this technology would contribute to enhancing the financial independence of the Gulf countries, by reducing dependence on the US dollar, and enabling more sovereign financial systems that are open to innovation.
Many times the traditional returns
From an individual perspective, Ajar highlights that digital assets are more volatile and riskier compared to traditional or Islamic financial instruments, but in return they achieve higher returns, reaching seven or eight times the traditional returns under normal circumstances. However, losses during periods of financial recession can be just as severe.
Ajar believes that allocating a "limited portion" of savings to digital currencies can be a profitable option for individuals with a high appetite for risk, provided that it is accompanied by a sufficient understanding of the risks. He points out that the long-term impact of this shift in savings behavior in the Gulf countries depends crucially on the extent to which digital currencies are integrated into the financial system through clear legal regulation.
If this integration takes place as it has in some developed countries, cryptocurrencies may begin to compete directly with traditional and Islamic financial instruments in the Gulf countries, which may put upward pressure on the returns of these instruments to attract savers, according to Ajar’s assessment. He noted that the reality on the ground shows that this behavioral shift has become tangible in the UAE and Bahrain, and is gradually growing in Saudi Arabia and Oman, while it is still limited in Qatar and Kuwait.
Ajar concludes that young Gulf citizens today view digital currencies and stablecoins not as a field for marginal speculation, but as a legitimate, albeit limited, component of their daily financial behavior, reflecting a fundamental shift in the culture of saving among the new generations.
Yayın Tarihi:
02 Ocak 2026