Arcane Research has suggested that despite demand for peer-to-peer (P2P) crypto trading platforms in the Middle East, regulations and lack of infrastructure is slowing down adoption. But undocumented migrants in western countries have been making use of these platforms to send money back home.
It has been reported that P2P crypto trading volume across the Middle East and Northern Africa is around 15% what it was in late 2017 on major platforms LocalBitcoins and Paxful, or around $682,000 a week.
The report stated:
“In general, there are several centralized exchanges providing services in the more developed Arab states. However, other countries in the region do not have this exchange infrastructure, and also lack financial and political stability, but [have] not seen any notable crypto adoption on the P2P.”
Likewise, there is a demand for P2P services in Middle Eastern countries facing inflation, as it allows residents to get money out of the country or simply convert to crypto.
The Lebanese pound has suffered massive inflation in 2020. And while Iran has been a hotspot for crypto miners due to the low cost of electricity, its currency has also been ravaged by crippling hyperinflation since the United States reimposed sanctions in 2018.
The report said that despite this, P2P exchanges in both Lebanon and Iran are struggling to establish a foothold due to “poor Internet infrastructure and political regimes being negative towards Bitcoin.”
Instead, Arcane researchers found that “less sophisticated” Bitcoin P2P trading methods have grown in the region during the same period, spurred by messaging apps like WhatsApp.
Also, the report indicated that undocumented immigrants living in western countries are turning to crypto to send funds home using gift cards in conjunction with P2P trading platforms when local laws make sending crypto more difficult.
Arcane Research suggests Venezuelan immigrants have found “workarounds” to send money home amid “clampdowns on cryptocurrencies and strict currency control.”
According to researchers, immigrants can purchase gift cards to any number of popular retailers like Amazon or just a prepaid credit card, and send a picture of it to family and friends abroad. The recipients could then sell it for Bitcoin using a P2P platform and convert it into local currency.
The report stated that such a remittance method was fast and reliable, but incurred significant fees.
Thus, the report stated:
“Bitcoin can be used as a capital flight tool for Venezuelans. The hyperinflation is a huge problem for Venezuela and [has] caused over 10% of the population to leave the country.”