Key Takeaways
- • Survey of more than 200 senior executives at institutional investors and wealth managers found 35% expect the Middle East to lead institutional digital asset adoption over the next three years, versus 24% for the US and EU including Switzerland.
- • Respondents name the UAE as the best-positioned institutional digital asset hub in the region (41%), ahead of Saudi Arabia (34%), Qatar (9%) and Bahrain (6%).
- • Sovereign and institutional capital access (45%) and government support (42%) are the leading reasons cited for regional attractiveness, while geopolitical risk is a factor in allocation decisions for 88% of respondents.
- • A third (33%) say stronger UAE-based regulatory and custody infrastructure would make them much more likely to allocate to regional funds, managers or products, with a further 57% saying slightly more likely.
- • Respondents expect the region to rank among the world's top three institutional digital asset hubs by 2030, per research from Nickel Digital Asset Management.
Summary
London-based Nickel Digital Asset Management (Nickel), which describes itself as Europe's leading digital assets hedge fund manager and was founded by alumni of Bankers Trust, Goldman Sachs and JPMorgan, has published research indicating the Middle East will lead growth in institutional digital asset adoption over the next three years, ahead of the US and EU. The study surveyed more than 200 senior executives at institutional investors and wealth managers across the US, UK, UAE, Germany, Switzerland, France, Italy, the Netherlands, Singapore, Brazil and the Nordics.
Of respondents, 35% expect the Middle East to lead, compared with 24% for the US and EU including Switzerland, 7% for the UK and 6% for Asia Pacific. Drivers cited include access to sovereign and institutional capital (45%), government support for the market (42%), tax efficiency (37%) and the speed of regulatory and policy development (32%). The UAE was identified as the best-positioned institutional digital asset hub in the region, selected by 41% of respondents, followed by Saudi Arabia at 34%, Qatar at 9% and Bahrain at 6%.
Geopolitical risk remains a constraint. Nearly nine in ten respondents (88%) said geopolitical risks factor into allocation decisions involving Middle East-based digital asset exchanges, custodians or managers, with 29% calling it a significant factor. Stronger UAE-based regulatory and custody infrastructure would make 33% of institutions much more likely to allocate to regional funds, managers or products, and 57% slightly more likely. On regulatory effectiveness, 31% said jurisdictions such as the UAE and Bahrain are more effective than Western counterparts at mitigating institutional digital asset risks, 55% said about as effective, and 10% said less effective.
Usage expectations are measured. Over the next two years, 22% of respondents expect their use of Middle East-based digital asset products, managers or service providers to increase significantly and 60% expect a moderate increase. Cited barriers include limited institutional track record and ecosystem in the region (22%), and concerns over local talent, operating history, market liquidity and the range of institutional products (15%).
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, said the region has become a global focal point for digital asset investment and tokenised finance, driven by progressive regulation, access to sophisticated institutional capital and growing real-world adoption. He added that institutional investors are increasingly looking beyond near-term events to the longer-term opportunity, and that the Middle East is building the regulatory framework, capital base and institutional infrastructure needed to become one of the world's leading digital asset hubs.
Of respondents, 35% expect the Middle East to lead, compared with 24% for the US and EU including Switzerland, 7% for the UK and 6% for Asia Pacific. Drivers cited include access to sovereign and institutional capital (45%), government support for the market (42%), tax efficiency (37%) and the speed of regulatory and policy development (32%). The UAE was identified as the best-positioned institutional digital asset hub in the region, selected by 41% of respondents, followed by Saudi Arabia at 34%, Qatar at 9% and Bahrain at 6%.
Geopolitical risk remains a constraint. Nearly nine in ten respondents (88%) said geopolitical risks factor into allocation decisions involving Middle East-based digital asset exchanges, custodians or managers, with 29% calling it a significant factor. Stronger UAE-based regulatory and custody infrastructure would make 33% of institutions much more likely to allocate to regional funds, managers or products, and 57% slightly more likely. On regulatory effectiveness, 31% said jurisdictions such as the UAE and Bahrain are more effective than Western counterparts at mitigating institutional digital asset risks, 55% said about as effective, and 10% said less effective.
Usage expectations are measured. Over the next two years, 22% of respondents expect their use of Middle East-based digital asset products, managers or service providers to increase significantly and 60% expect a moderate increase. Cited barriers include limited institutional track record and ecosystem in the region (22%), and concerns over local talent, operating history, market liquidity and the range of institutional products (15%).
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, said the region has become a global focal point for digital asset investment and tokenised finance, driven by progressive regulation, access to sophisticated institutional capital and growing real-world adoption. He added that institutional investors are increasingly looking beyond near-term events to the longer-term opportunity, and that the Middle East is building the regulatory framework, capital base and institutional infrastructure needed to become one of the world's leading digital asset hubs.
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