The Middle East and North Africa's annual on-chain crypto transaction volume has experienced dramatic growth, increasing from approximately $100 billion in 2022 to an estimated $350 billion during 2025-2026, according to a Bitcoin Policy Institute report published on September 4. Turkey remains the region's largest crypto market with annual transaction volume approaching $200 billion, while Saudi Arabia recorded 154% year-over-year growth and Qatar followed with 120% increase. The UAE processed approximately $150 billion in crypto transactions during 2025, as reported by the Bitcoin Policy Institute. The growth is attributed to inflation, currency depreciation, government-backed technology programs and greater institutional participation across the region.
The UAE's Federal Tax Authority (FTA) has introduced a comprehensive framework for businesses dealing with digital currencies and VAT reporting. According to reports from AMBCrypto, businesses must now convert digital currency values into UAE dirhams (AED) rather than simply reporting crypto amounts in their VAT returns. The new directive, issued under Directive on Tax Transactions No. 3 of 2026, establishes a three-step conversion mechanism to ensure proper VAT disclosure for crypto transactions. The directive applies to any taxable person supplying a digital currency, or supplying goods or services where the consideration is received in digital currency.
The new framework requires businesses to select three FTA-approved centralized crypto exchanges and use the same platforms consistently throughout the calendar year. As reported by AMBCrypto, businesses must calculate the numerical average of exchange rates for the digital currency in question, using rates that prevailed at the date and time of the supply, or the date and time the consideration was received, whichever is applicable. For example, if Bitcoin is valued at AED 400,000, AED 402,000, and AED 398,000 on three exchanges, the average rate would be AED 400,000. A payment of 0.01 BTC would therefore be valued at AED 4,000 for VAT reporting. Businesses are required to retain records proving the exchange rates obtained from each of the three platforms, in addition to their other existing record-keeping obligations relating to the supply.
The approved list of exchanges currently includes five platforms: Binance, Bybit Fintech, Deribit, Bitget, and Payward. According to AMBCrypto reports, businesses must maintain records of rates from all three exchanges and evidence of how the average was calculated for compliance and potential FTA checks. If a digital currency is not available on three approved exchanges, the FTA will issue separate guidance on how businesses should determine its value. The authority has also released its approved list of centralised public digital currency exchange platforms for the purposes of the directive.
The UAE has established a regulated institutional crypto market with specific regulatory frameworks across different jurisdictions. Dubai's Virtual Assets Regulatory Authority oversees eligible crypto activities outside the Dubai International Financial Centre, while Abu Dhabi Global Market operates a separate financial-services framework. The Central Bank of the UAE regulates payment-token services, and the UAE has developed a Digital Dirham wallet to support retail and wholesale use cases, with the first live government transaction using the Digital Dirham completed in 2025. According to the Bitcoin Policy Institute report, the UAE's market is institutionally oriented, with Bitcoin accounting for 38% of activity, Ether representing 22%, and dollar-backed stablecoins making up 30% of the estimated $150 billion in 2025 transactions.
The Bitcoin Policy Institute's report describes two distinct adoption patterns across MENA. Residents in economies affected by inflation, capital restrictions, sanctions or conflict have used Bitcoin and dollar-backed stablecoins to preserve value or transfer funds, while Gulf countries have attracted exchanges, institutional trading companies and tokenization platforms through regulated financial centers. Egypt, Lebanon and Iran show similar but more constrained adoption patterns, with peer-to-peer Bitcoin trading in Egypt increasing by more than 300% following successive Egyptian pound devaluations. Bahrain has introduced its Stablecoin Issuance and Offering Module in July 2025, applying to regulated stablecoin offering services conducted in or from Bahrain, while Singapore Gulf Bank has partnered with Fireblocks to expand crypto custody and stablecoin services.
