Key Takeaways
- • The GCC states are opening to digital finance as part of efforts to diversify economies and reduce reliance on U.S.-dominated monetary systems, according to a Carnegie Middle East Center article by Ala'a Kolkaila published May 21, 2025.
- • The GCC blockchain market was valued at $744.3 million in 2024, with an estimated 16.75 percent CAGR from 2025 to 2033 and a projected $791.8 million by the end of 2025, per the article's figures.
- • The UAE leads the region in crypto adoption and regulation, while Saudi Arabia restricts crypto trading by financial institutions but remains the region's second-largest and fastest-growing market.
- • Bahrain and Oman are pursuing regulation-first approaches, while Kuwait and Qatar remain the most restrictive, though Qatar is moving to introduce a digital asset legal framework expected to be finalized in Q2 2025.
- • Wholesale CBDC pilots are under way in the UAE, Bahrain, Oman, and Saudi Arabia, and the UAE Central Bank approved its first regulated stablecoin, AE Coin.
Summary
According to a Carnegie Middle East Center article by Ala'a Kolkaila, published May 21, 2025, the Gulf Cooperation Council states are, to varying degrees, opening up to digital finance as they seek to diversify their economies and reduce reliance on U.S.-dominated monetary systems. The article frames cryptocurrencies as policy instruments in trade and geopolitics, linking the shift to strained U.S.-Saudi relations under the Biden administration, the weaponization of the U.S. dollar through sanctions, the economic fallout of the Ukraine war, and deeper GCC partnerships with China and Russia. It also notes the entry of the UAE and Saudi Arabia into the BRICS+ bloc.
The article cites blockchain adoption in the region reaching a compound annual growth rate of 70 percent, while describing cryptocurrency itself as contentious because of its speculative nature and Sharia-compliance concerns. GCC crypto market capitalization is described as comparatively nascent, with a total market size of $744.3 million in 2024 and a projected $791.8 million by the end of 2025, and a 19.32 percent user penetration rate.
Country approaches diverge sharply. The UAE is described as the region's crypto trailblazer, supported by the Virtual Asset Regulatory Authority and two financial free zones. Saudi Arabia has banned crypto trading by financial institutions, yet the article identifies it as the region's second-largest and fastest-growing market, driven by youth adoption, with youth making up 63 percent of the population. The Saudi Arabian Monetary Authority is cited for promoting blockchain, and Rothschild and Goldman Sachs are described as planning tokenization projects. Bahrain's central bank has classified crypto assets as securities, and Oman's Financial Services Authority has set up a provisional framework for virtual asset service providers. Kuwait and Qatar remain the most restrictive, although Qatar's Qatar Financial Centre is developing a digital asset framework.
On central bank digital currencies, the article reports wholesale CBDC pilots in the UAE, Bahrain, Oman, and Saudi Arabia, and notes that Qatar will pilot wholesale CBDC with potential retail expansion. It also cites a 2019 SAMA and UAE Central Bank interoperability test under Project Aber. The article cautions that widespread CBDC adoption could challenge bank deposits, which fund 83 percent of bank balance sheets. It presents stablecoins as more palatable alternatives, citing the UAE Central Bank's approval of AE Coin.
The article cites blockchain adoption in the region reaching a compound annual growth rate of 70 percent, while describing cryptocurrency itself as contentious because of its speculative nature and Sharia-compliance concerns. GCC crypto market capitalization is described as comparatively nascent, with a total market size of $744.3 million in 2024 and a projected $791.8 million by the end of 2025, and a 19.32 percent user penetration rate.
Country approaches diverge sharply. The UAE is described as the region's crypto trailblazer, supported by the Virtual Asset Regulatory Authority and two financial free zones. Saudi Arabia has banned crypto trading by financial institutions, yet the article identifies it as the region's second-largest and fastest-growing market, driven by youth adoption, with youth making up 63 percent of the population. The Saudi Arabian Monetary Authority is cited for promoting blockchain, and Rothschild and Goldman Sachs are described as planning tokenization projects. Bahrain's central bank has classified crypto assets as securities, and Oman's Financial Services Authority has set up a provisional framework for virtual asset service providers. Kuwait and Qatar remain the most restrictive, although Qatar's Qatar Financial Centre is developing a digital asset framework.
On central bank digital currencies, the article reports wholesale CBDC pilots in the UAE, Bahrain, Oman, and Saudi Arabia, and notes that Qatar will pilot wholesale CBDC with potential retail expansion. It also cites a 2019 SAMA and UAE Central Bank interoperability test under Project Aber. The article cautions that widespread CBDC adoption could challenge bank deposits, which fund 83 percent of bank balance sheets. It presents stablecoins as more palatable alternatives, citing the UAE Central Bank's approval of AE Coin.
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