The milestone investment by Abu Dhabi's MGX into Binance is expected to boost institutional investor interest in cryptocurrencies, as it is widely viewed as a vital driver for regulatory clarity, analysts have said.
The technology investment company said last week that it will invest $2 billion in Binance, getting a minority stake, marking the first institutional investment in the world’s largest cryptocurrency exchange.
Institutional interest in crypto has been building for years, but 2025 marks a "tipping point", as the MGX investment is part of a larger trend that would see hedge funds, exchanges and asset managers committing "meaningful capital" to digital assets, said Sebastien Badault, vice president at French cryptocurrency and cyber security company Ledger.
"Risk frameworks have matured, regulatory clarity is improving and new financial products like spot Bitcoin exchange-traded funds have made access easier. The volatility that once kept institutions on the sidelines is now viewed as a feature rather than a bug," he told The National.
"Sophisticated investors see crypto as a high-growth asset class with uncorrelated returns, deepening liquidity and an emerging derivatives market. The real question is no longer if institutions should invest, but how they can do so securely and at scale."
Binance chief executive Richard Teng previously told The National that the exchange would focus heavily on working with regulators in the aftermath of a 2023 legal case that resulted in previous boss Changpeng Zhao stepping down. Mr Teng was the former chief executive of Abu Dhabi Global Market's Financial Services Regulatory Authority, which oversees digital assets.
Binance's VIP user base doubled in 2024, while the number of its registered institutional users nearly doubled, showing a trend that "highlight[s] crypto’s expanding reach and deepening integration with traditional finance", a company representative told The National.
"Institutional interest continues to rise, as evidenced by strong ETF inflows, with new applications being filed regularly. Regulatory momentum remains strong in key markets such as the United States, creating a clearer path for mainstream adoption. Market cycles come and go, but the fundamental indicators of crypto’s strength – adoption, liquidity, and institutional participation – are only getting stronger."
The exchange's focus on security, compliance and collaboration with regulators, particularly in the UAE, "helps build trust among market participants", said Hamza Zraimek, chief executive of US-based tech consultancy Iguodar.
"As Binance and MGX collaborate on scalable blockchain solutions, they set a standard for meeting global regulatory frameworks, with the UAE’s progressive regulations serving as a model for other regions, helping to create a more secure and credible crypto ecosystem," he told The National.
'Global crypto hub'
The UAE is taking steps to boost the adoption of digital assets and has launched several initiatives to support the sector.
Abu Dhabi's ADGM has attracted global cryptocurrency players such as eToro and M2, allowing these companies to operate as a brokers for securities, derivatives and crypto assets, and platforms for institutional and retail investors to buy, sell and hold custody of virtual assets.
Dubai also adopted a law in 2022 to regulate virtual assets to support investors and streamline the offerings from exchanges. The emirate also set up the Virtual Assets Regulatory Authority under the Dubai Virtual Asset Regulation Law, to create an advanced legal framework.
The UAE Central Bank also issued a regulation on stablecoins in June that will only allow businesses and sellers in the Emirates to accept cryptocurrencies for goods and services if they are dirham-backed stablecoins.
"Institutional adoption is a mark of crypto’s maturity and clear regulatory frameworks are a key driver. This is evident in recent regional developments with this investment as well as with Emirates NBD’s strategic entry into the space leveraging regulated channels," Arushi Goel, head of policy for the Middle East and Africa at blockchain company Chainalysis, told The National.
Emirates NBD, Dubai's biggest bank by assets, earlier this month announced its entry into the digital asset space with the launch of cryptocurrency trading services on its Liv lifestyle banking unit.
"This relationship is bidirectional. Clear regulations attract institutional players who subsequently drive regulatory advancements through their rigorous compliance standards, resulting in a positive sum outcome for all stakeholders," Ms Goel added.
The UAE has emerged as the Mena region's third-largest crypto economy after Saudi Arabia and Turkey, latest data from New York-based Chainalysis shows. The country received around $34 billion worth of cryptos between July 2023 and June 2024, a 42 per cent annual jump that is significantly higher than the Mena average of almost 12 per cent.
"Along with retail participants, institutional investors are also witnessing the industry’s growth in the Emirates, which is slowly turning into a global crypto hub," Vijay Valecha, chief investment officer of Dubai-based Century Financial, told The National.
"Such a development could encourage more crypto exchanges to set up shop in the UAE, leading to an enhanced level of institutional investment activity for the region."
In January, the Dubai Multi Commodities Centre and Reit Development also unveiled plans for Crypto Tower, aimed at demonstrating the practical use of blockchain, as it will use the technology for real estate, and tenant management and ownership, on-chain voting and smart contracts.
At last month's Dubai Boat Show, it was revealed that demand for luxury yachts in the region is rising as more cryptocurrency investors enter the market, and those who bought property during the pandemic have cashed in on their long-term profits, experts told The National.
"A key trend is the rise of tokenised assets, where things like real estate, stocks and bonds are turned into digital tokens on blockchain networks. This makes transactions faster and unlocks more liquidity, attracting institutional investors," Mr Valecha added.
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The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
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Pox that threatens the Middle East's native species
Camelpox
Caused by a virus related to the one that causes human smallpox, camelpox typically causes fever, swelling of lymph nodes and skin lesions in camels aged over three, but the animal usually recovers after a month or so. Younger animals may develop a more acute form that causes internal lesions and diarrhoea, and is often fatal, especially when secondary infections result. It is found across the Middle East as well as in parts of Asia, Africa, Russia and India.
Falconpox
Falconpox can cause a variety of types of lesions, which can affect, for example, the eyelids, feet and the areas above and below the beak. It is a problem among captive falcons and is one of many types of avian pox or avipox diseases that together affect dozens of bird species across the world. Among the other forms are pigeonpox, turkeypox, starlingpox and canarypox. Avipox viruses are spread by mosquitoes and direct bird-to-bird contact.
Houbarapox
Houbarapox is, like falconpox, one of the many forms of avipox diseases. It exists in various forms, with a type that causes skin lesions being least likely to result in death. Other forms cause more severe lesions, including internal lesions, and are more likely to kill the bird, often because secondary infections develop. This summer the CVRL reported an outbreak of pox in houbaras after rains in spring led to an increase in mosquito numbers.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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