The adoption of cryptocurrency is a complicated subject in the Middle East.
Nations such as the United Arab Emirates (UAE) have opened their arms to the idea of incorporating digital currencies and blockchain technology in their finance sector.
By contrast, Kuwait have vehemently prohibited crypto-related activities. This divergence in approach could have a telling impact on the lucrative iGaming sector.
Kuwait’s Reluctance & Regulatory Concerns
Kuwait is among a number of Gulf States that has adopted a more conservative stance on crypto.
While some of their neighbours are throwing their weight behind the thriving sector, Kuwait has consistently shown they are under no pressure to follow in their footsteps.
The country banned Bitcoin mining and reinforced their existing restrictions on crypto and all its related activities last year, warning that the digital currency will not be accepted as a legal tender within its borders.
Kuwait’s express disapproval of crypto payments stems from a deep-rooted concern that it could be used for illegal activities such as money laundering.
Bitcoin had previously been operating in a regulatory grey area, but the new ban on the currency further proves that the Kuwaiti government is serious about cracking down on crypto.
Kuwait's cheap electricity made it one of the most popular and affordable places to mine Bitcoin. But the Ministry of Electricity and Water has taken measures to clamp down on individuals who exploit these low tariffs for crypto mining.
Regulators have made it clear that they will not issue licences to platforms offering crypto services as a commercial enterprise.
They’ve gone as far as announcing that anyone caught mining Bitcoin in the country could face money laundering and terrorist financing charges.
The ban on crypto is also causing headaches for the gambling industry, as online gaming platforms often prefer digital currencies for their speed, security and anonymity.
For real money online casinos in Kuwait, the crackdown creates operational challenges, especially in payment processing.
Now that crypto is off the table, players who previously used Bitcoin or other cryptocurrencies to fund their accounts or withdraw winnings will face limitations.
This could deter tech-savvy users and high rollers who prefer to use digital currencies for their transactions.
The UAE’s Proactive Stance on Crypto
The UAE is renowned as a global hot spot for tech and finance.
They have established special economic zones such as the Dubai International Financial Centre (DIFC) to attract tech companies and make it easy for them to set up shop in the country.
The plan has already caught a big fish, with Ripple now working closely with the DIFC.
As a global payment and financial solutions powerhouse, Ripple’s collaboration with DIFC is a testament to the UAE’s commitment to strengthening their position in the digital economy.
Ripple is all about using blockchain technology to make money move faster and easier, and the partnership with Dubai is expected to bring even more businesses to the region.
Dubai has also sweetened the deal for Ripple, offering the payment company a 50-year guarantee of zero taxes on corporate income and profits.
The city’s favourable economic policies and clear rules for business dealings with digital currencies have made it a magnet for tech companies, and the deal with Ripple could open the floodgates for more to set up shop in the UAE.
The partnership between the DIFC and Ripple is also a big deal because it will contribute to the growth of fintech companies within the country.
Ripple has chosen the DIFC as the base for its Middle East and Africa operations, further proving just how important Dubai is for the company’s global plans.
This environment encourages the development of new financial solutions, which could have far-reaching implications for various sectors, including banking, finance and digital payments.
What Does This Divergence Mean for the iGaming Sector?
The subject of crypto adoption has split the Middle East down the middle, with some nations eager to embrace the potential of digital assets and blockchain technology.
The UAE has long been keen to reduce their dependence on the oil and gas sector and diversify their economy. They see crypto as a viable way to set up another profitable revenue stream.
However, others like Kuwait are still reluctant to open their arms to the idea of leveraging crypto assets because they’re more scared about the potential downside, leaving them completely blind to the economic benefits it could bring to their finance sector.
The contrasting approach could have a telling effect on various sectors, including iGaming. The industry relies heavily on digital payments and would thrive in jurisdictions such as the UAE, given their more liberal approach towards crypto.
The iGaming sector in places like Dubai could benefit from integrating blockchain tech and digital currencies, offering increased security and efficiency in only gaming transactions.
However, more restrictive environments like Kuwait will undoubtedly stifle the growth of iGaming.
It will limit innovation, reduce player engagement and potentially drive operators and users to seek more favourable jurisdictions where digital assets and cryptocurrencies are embraced.