The United Arab Emirates and Saudi Arabia in the Middle East have made progress in the Web3 field, becoming important centers for cryptocurrency and blockchain innovation, but whether this development can be sustained remains to be seen.

Author: Lorna Blount

Translation: Plain Blockchain

The Middle East has made progress in the Web3 field, with the United Arab Emirates (UAE) establishing the Virtual Asset Regulatory Authority (VARA) in Dubai and the Abu Dhabi Global Market (ADGM). Last year, Hub71, headquartered in ADGM, launched a $20 billion plan to support Web3 startups in the region. With a positive attitude towards cryptocurrency, innovation, and tax incentives, the UAE has become a hotspot for cryptocurrency, blockchain projects, and funds. Now, its competitor Saudi Arabia also has ambitions to prove itself as its own Web3 center.

UK-based Outlier Ventures recently announced a partnership with the Saudi National Technology Development Plan (NPDP) to launch its own Web3 accelerator program. Outlier Ventures CEO Stephan Apel said, "The highly focused, highly educated, and internationally experienced staff, as well as the people coming to Saudi, are very interesting."

Apel told CoinDesk, "While Saudi Arabia's Web3 ecosystem is still developing, we have observed a very rapid pace of development and tremendous potential."

It has been reported that Saudi Arabia's Public Investment Fund (PIF), with a total of $95 billion, has been in talks with Andreessen Horowitz (A16z), a major venture capital firm for Web3 startups. Leading Asian Web3 game venture capital firm Animoca Brands has partnered with King Abdulaziz City for Science and Technology (KACST) in Riyadh to drive the country's game ecosystem development.

At The Outer Edge Summit held in KACST's entrepreneurial area Garage, Animoca Brands CEO Robby Yung praised the opportunities in Saudi Arabia and the Middle East. He said, "We are a bit late to the party here. We recognized the opportunity here ten years ago, but at that time, there were no resources to tap into new markets."

He told CoinDesk during Animoca's Outer Edge Summit in Riyadh, "This is a truly important place on the map… Since 2020, due to the regulatory framework, the UAE has become a hub for the Web3 community. This is a huge country, with over 60% of the population under the age of 30. These people are gamers, they are our target audience. So, we want to be on the ground and understand how to communicate with them. We think it's very important to start from here as a point of contact."

Meanwhile, Singapore-based venture capital firm Golden Gate Ventures has expanded its office to the Gulf region and sees Saudi Arabia as the next frontier for development.

Golden Gate partner Micheal Lints said, "Overall, there is a very healthy demand for investment in Saudi Arabia, although the influence of Web3 in the region is not as significant as in other regions. With increased investment in artificial intelligence, we will quickly see more Web3 investments."

Saudi Arabia has its strengths and weaknesses in attracting Web3 investments. It ranks 62nd in the World Bank's "Ease of Doing Business" index, performing well in indicators such as "Starting a Business" (overall ranking 38th) and "Getting Electricity" (ranking 18th). However, it performs poorly in "Getting Credit" (ranking 80th) and "Cross-Border Trade" (ranking 86th). Its policies regarding women in the workforce and alcohol may make it less attractive to startups accustomed to operating in less restrictive environments.

New Era Metaverse

XVRS is the metaverse platform of the New Era (NEOM), a $1.5 trillion desert city announced by Saudi Arabia in 2017, and is one of the largest Web3-related projects in Saudi Arabia to date. It has reportedly invested over $1 billion to create an immersive digital twin of NEOM. The space will offer immersive entertainment, social platforms, and an integrated cryptocurrency and non-fungible token (NFT) digital marketplace, according to project supporters.

At the inaugural Leap Summit of the Saudi Investment Department, the Hashgraph Association announced a five-year partnership with local tech startups, including a $250 million DeepTech startup studio. The Leap Summit is Saudi Arabia's annual tech conference, which this year attracted over 220,000 attendees, nearly double that of the Consumer Electronics Show (CES) in Las Vegas.

Legislation

While Saudi Arabia's legal regulations regarding cryptocurrency are not clear, a report from blockchain analysis company Chainalysis shows that the country's population of 36 million is increasingly interested in cryptocurrency. The analysis shows that by 2023, cryptocurrency investors in Saudi Arabia had accumulated profits exceeding $350 million, surpassing the approximately $204 million in the UAE during the same period.

The world's largest cryptocurrency exchange, Binance, is considering the country as a source of growth, according to Bandar Al Tunisi, head of Binance's development in Saudi Arabia. He said Binance is in talks with regulatory authorities, including the Saudi Arabian Monetary Authority (SAMA), the Capital Market Authority, and the Ministry of Communications and Information. Al Tunisi hopes the country can achieve "high-level" regulation of digital currencies as soon as possible.

He said, "I think it's one of the most important places in the world in terms of opportunity, growth, the willingness of leadership, the flexibility of leadership, and the capabilities of the local population."

He added, "We are optimistic about the (regulatory framework) being achieved this year. Obviously, this is not something we can control, but we are in place, and we are ready."

Saudi Arabia's proactive attitude towards innovation, along with strategic partnerships and its "Vision 2030" initiative, has made the country a significant competitor in the global Web3 field. However, time will tell whether the expectations brought about by government-driven initiatives can lead to a sustainable Web3 industry.

Source: https://www.coindesk.com/consensus-magazine/2024/04/30/web3-in-the-middle-east-do-all-roads-lead-to-riyadh/?utm_medium=referral&utm_source=rss&utm_campaign=headlines

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