In brief
- Chainalysis this week released its 2020 Geography of Cryptocurrency Report.
- The report shows that Turkey accounts for a large percentage of cryptocurrency use in the Middle East—in part due to the weak national currency.
- The Middle East is still the second-smallest cryptocurrency market in the world.
Turkey is the undisputed cryptocurrency king of the Middle East, with the country adopting digital assets at significantly higher rates than neighboring countries, a new report by crypto forensics firm Chainalysis has revealed.
Turkey ranks 29th out of the 154 countries on Chainalysis’ Global Crypto Adoption Index—and number one in the Middle East, according to the firm’s 2020 Geography of Cryptocurrency Report, published this week.
The country has long been a haven for cryptocurrency adoption, and the economic uncertainty in Turkey plays a part in soaring popularity, said Chainalysis. “The [Turkish] lira has been extremely volatile in recent years, prompting some to shift portions of their savings to cryptocurrency,” the report noted.
Currently there are no cryptocurrency regulations in Turkey—but the country’s Capital Markets Board (CMB) is in the process of developing a framework.
Chainalysis showed that most trades from the Middle East on major exchanges Binance, Huobi, and Bitfinex come from Turkish users.
On Turkey-based exchange BTCTurk, the most common trade is lira for Bitcoin, the report said, noting that it was “likely that most users utilize BTCTurk to purchase cryptocurrency before sending it to other, larger platforms like Binance that offer more liquidity and trading pairs.”
The report also showed that pre-existing adoption of mobile fintech and payments platforms was higher in Turkey than elsewhere in the region and that an incoming regulatory framework would likely lead to more crypto adoption.
Even before Covid-19 hit Turkey’s economy hard, the country was struggling: the economy slid into recession at the end of 2018. Foreign debt and unemployment has long been high.
The lira is also very weak. This year it hit record lows—a 20% fall—making it the third-weakest currency in the world in 2020, according to Reuters.
Elsewhere in the Middle East, Chainalysis noted that other countries are ahead of the game in terms of regulation, government acceptance, and promotion—despite having lower levels of adoption. The Middle East remains, however, the second-smallest cryptocurrency market in the world, according to the report, behind Africa.