By Dr Soha Maad
Introduction
This article sheds lights on latest development in the global virtual asset market and focuses on key global statistics about virtual assets. The article overviews latest news about virtual assets market growth and how virtual assets will lead digital transformation of global finance and the potential benefits of digital assets on the domestic economy. Following this overview, the article lists various sources of data and considers key facts and global statistics about virtual assets. Key statistics considered include market capitalisation, market adoption, and top virtual assets to invest in. The article concludes with a future outlook and recommendation for authorities in Arab countries to establish local ministries for digital assets and economy in order to embrace the global market growth of digital assets.
Virtual Assets Market Growth
According to IMF Financial Stability Report 2022 and CEO Brief by Kiri, Since the introduction of Bitcoin in 2009, the virtual asset market has grown rapidly due to abundant market liquidity, expansion of the blockchain ecosystem, and the introduction of stablecoins. Virtual assets can contribute to financial innovation and economic growth through enhancing the efficiency of the financial system and expanding the blockchain ecosystem. However, consumer protection and anti-money laundering are the main challenges facing virtual assets due to lack of transparency and regulation.
The Covid-19 pandemic accelerated the growth of the global virtual assets market. Governments and central banks around the world implemented expansionary fiscal policy and accommodative monetary policy to stimulate the economy in coping with the COVID-19 crisis. This has increased market liquidity and subsequently demand for virtual assets. In addition, as blockchain technology is employed in various fields centered around smart contracts, the blockchain ecosystem is expanding through the creation of new industries such as NFT (Non-Fungible Token) and DeFi (Decentralized Finance) leading to an increase in demand for virtual assets.
According to South China Morning post and global market intelligence report by International Data Corporation IDC, interest in cryptocurrencies is growing, with the cost of bitcoin, the world’s largest cryptocurrency, rising above the US$50,000 in August 2022 after the value fell in May 2022. The value of other coins including ethereum and dogecoin is also rising.
Interest in technology-led innovations for virtual assets has increased with rising investment. Direct blockchain spending alone has risen over 50% in 2021 compared to its value in year 2020 and is expected to exceed US$19 billion in 2024.
According to Statista analysis, growing interest in cryptocurrencies, including bitcoin and ethereum, has led to more than 75 million people around the world to use blockchain wallets – digital wallets which can store and manage cryptocurrencies.
According to Allied Market Research analysis, increased investment in digitisation and cryptocurrencies means that the global cryptocurrency asset management market offers huge untapped growth potential.
Virtual Assets and Digital Transformation
According to PwC, inventions and innovations of the digital age, which began in the 1970s, has resulted in a paradigm shift in economies, culture, work style, education, health, investing, and everything is becoming smarter.
Similarly, financial technology is driving innovation in financial markets globally and bringing with it the emergence of virtual asset markets. With many individuals interacting with virtual assets on a daily basis, from investing in crypto as a virtual asset to digitisation of existing investment assets, the virtual assets market is becoming integrated in the existing fabric of traditional financial markets.
The market structure of the virtual asset space initially built around retail, high-net-worth, and crypto-native investors has expanded with traditional institutional investors who are including virtual assets into their existing portfolio of traditional investments. Moreover, monetary authorities around the world are adopting digital currencies as a legal tender or introducing a digital version of their countries’ currency.
Benefits of Virtual Assets to the Domestic Economy
According to PwC, there are lots of untapped opportunities within the domestic economy that virtual assets could unlock and which would be beneficial to the entire value chain. New forms of value could be created through innovation in the virtual assets market leading to a massive change in the financial landscape of the domestic economy. Some of the potential benefits include:
Asset tokenisation: The fractionalisation of high valued conventional/illiquid assets such as equity securities, real estate, commodities, and loans offer retail investors greater access to a wider pool of investments which they could not normally afford to buy, as they can now purchase smaller denominations in digital token form. This has the potential to drive greater liquidity across the capital markets.
Portfolio diversification: Virtual assets could provide diversification benefits when added to a portfolio of traditional assets, as virtual assets have historically had low correlations with traditional assets.
Convenience of payment services: Central Bank Digital Currencies (CBDCs), have the ability to achieve faster payments through instant settlements. This would strengthen the competition for retail and cross-border payment services and help governments to accelerate digital transformation of their economies.
Security and transparency: The transactions of virtual assets are recorded on transparent public ledgers that create an information flow for all transactions done. Therefore, tracking transactions and establishing audit trails is relatively easy.
Financial equity and inclusion: The evolutionary technology behind virtual assets makes it quite appealing to drive and possibly achieve greater financial inclusion in the economy. Virtual assets can potentially expand the reach of financial institutions and close gaps by providing opportunities to reduce fees and eliminate middlemen, as well as attract foreign investors.
Reduced cost and complexity: The complexity of existing processes can be reduced with virtual assets and the automation of controls lead to process improvements that reduce cost.
Efficiency: Asset digitisation and blockchain technology improves existing transaction processes through reduced cost, increased transparency and asset liquidity, thereby enabling greater operational efficiency.
VIRTUAL ASSETS MARKET CRASH IN 2022
In March 2022, a crash in cryptocurrency prices has wiped away more than $300 billion in value. The price of Bitcoin plunged to its lowest point since 2020. Coinbase, the large cryptocurrency exchange, that promoted itself as a stable means of exchange collapsed, and more than $300 billion was wiped out by a crash in cryptocurrency prices, according to New York Times news.
The crypto world went into a full meltdown in March 2022. This ascertains the risks of the experimental and unregulated digital currencies. The accelerating declines of virtual currencies like Bitcoin and Ether show that, in some cases, two years of financial gains can disappear overnight.
The falling prices had broad impact because more people and institutions hold crypto currencies. Critics said the collapse was long overdue, while some traders compared the alarm and fear to the start of the 2008 financial crisis.
Grassroots Adoption of Cryptocurrency
Chainanalysis developed a grassroots Global Crypto Adoption Index which is made up of five sub-indexes, each of which is based on countries’ usage of different types of cryptocurrency services. Chainanalysis ranks countries according to each of the five metrics, take the geometric mean of each country’s ranking in all five, and then normalize that final number on a scale of 0 to 1 to give every country a score that determines the overall rankings. The closer the country’s final score is to 1, the higher the rank.
In order to calculate sub-indexes, Chainanalysis estimated countries’ cryptocurrency transaction volumes for different services and protocols based on the web traffic patterns of those services’ and protocols’ websites.
The five sub-indexes of the Global Crypto Adoption Index are:
On-chain cryptocurrency value received at centralized exchanges, weighted by purchasing power parity (PPP) per capita:
The goal of this sub-index is to rank each country by total cryptocurrency activity occurring on centralized services, and to then weight the rankings to favour countries where that amount is more significant based on the wealth of the average person and value of money generally within the country.
On-chain retail value received at centralized exchanges, weighted by PPP per capita
The goal of this metric is to measure the activity of non-professional, individual cryptocurrency users at centralized services, based on how much cryptocurrency they’re transacting compared to the wealth of the average person.
Peer-to-peer (P2P) exchange trade volume, weighted by PPP per capita and number of internet users
P2P trade volume makes up a significant percentage of all cryptocurrency in emerging markets. For this sub-index, we rank countries by their P2P trade volume and weight it to favour countries with lower PPP per capita and fewer internet users, the goal being to highlight countries where more residents are putting a larger share of their overall wealth into P2P cryptocurrency transactions.
On-chain cryptocurrency value received from decentralised finance (DeFi) protocols, weighted by PPP per capita
Decentralised finance (DeFi) has been one of the fastest-growing areas of cryptocurrency over the last two years. Given the importance of DeFi to innovation in cryptocurrency, the adoption index highlights countries where users are concentrating a disproportionately high share of their financial activity in DeFi protocols.
On-chain retail value received from DeFi protocols, weighted by PPP per capita
The Global Crypto Adoption Index incorporates the activity of non-professional, individual cryptocurrency users on centralized services.
Figure 1. The 2022 Global Crypto Adoption Index
Country |
Overall index ranking |
Overall index score |
Centralized service value received ranking |
Retail centralized service value received ranking |
P2P exchange trade volume ranking |
DeFi value received ranking |
Vietnam |
1 |
1.000 |
5 |
5 |
2 |
7 |
Philippines |
2 |
0.753 |
4 |
4 |
66 |
13 |
Ukraine |
3 |
0.694 |
6 |
6 |
39 |
10 |
India |
4 |
0.663 |
1 |
1 |
82 |
1 |
United States |
5 |
0.653 |
3 |
3 |
111 |
3 |
Pakistan |
6 |
0.609 |
10 |
10 |
50 |
22 |
Brazil |
7 |
0.562 |
7 |
7 |
113 |
8 |
Thailand |
8 |
0.560 |
12 |
12 |
61 |
5 |
Russia |
9 |
0.541 |
8 |
8 |
109 |
11 |
China |
10 |
0.535 |
2 |
2 |
144 |
6 |
Nigeria |
11 |
0.521 |
18 |
18 |
17 |
20 |
Turkey |
12 |
0.519 |
9 |
9 |
121 |
19 |
Argentina |
13 |
0.510 |
13 |
13 |
26 |
21 |
Morocco |
14 |
0.507 |
19 |
19 |
21 |
33 |
Colombia |
15 |
0.496 |
23 |
23 |
10 |
27 |
Nepal |
16 |
0.478 |
17 |
17 |
19 |
34 |
United Kingdom |
17 |
0.473 |
14 |
14 |
71 |
12 |
Ecuador |
18 |
0.409 |
37 |
37 |
6 |
45 |
Kenya |
19 |
0.397 |
43 |
43 |
5 |
9 |
Indonesia |
20 |
0.396 |
16 |
16 |
129 |
18 |
(source: Chainanalysis)
Virtual Assets ADOPTION in mena
According to Arabian business, Middle East and North Africa (MENA) is the fastest-growing cryptocurrency market in the world. Cryptocurrency is emerging as a $566bn market in the MENA region and is set to get even bigger
The 2022 Global Crypto Adoption Index reveals that MENA-based users received $566bn in cryptocurrency from July 2021 to June 2022, 48 percent more than they received the year prior.
Three of the top 30 countries in the 2022 Global Crypto Adoption Index are in the MENA region.
Turkey (12), Egypt (14), and Morocco (24) all feature prominently and are seeing significant increases in use of cryptocurrency. Use cases around savings preservation and remittance payments as well as increasingly permissive crypto regulations were the main reason.
According to Chainalysis, in Turkey and Egypt, fluctuating cryptocurrency prices have coincided with rapid fiat currency devaluations, strengthening the appeal of crypto for savings preservation.
Also significant, however, is Egypt’s remittance market. Remittance payments account for about 8 percent of Egypt’s Gross Domestic Product GDP, and the country’s national bank has already begun a project to build a crypto-based remittance corridor between Egypt and the United Arab Emirates UAE, where many Egyptian natives work.
Egypt saw the greatest transactional volume increase between June 2020 and July 2021. It increased 221.7 percent, compared to 194.8 percent in Saudi Arabia, 120.9 percent in Lebanon, 120.9 percent in Morocco and 37.2 percent in the United Arab Emirates.
Outside the region, Latin America was the fastest growing market in the same period, at 40 percent. North America was a larger market, but still saw a 36 percent increase in usage, followed closely by Central and Southern Asia and Oceania at 35 percent growth.
Turkey tops the MENA region in terms of value of crypto received by far, having received $192 billion worth of crypto to end June 2022.
According to Chainalysis, the Gulf Cooperation Council (GCC) countries play a big role in the crypto ecosystem. Saudi Arabia, for example, is the third-largest crypto market in all of MENA, and United Arab Emirates UAE is fifth.
The 2022 Global Crypto Adoption Index by chainanalysis, reveals that emerging markets lead in grassroots adoption, China remains active despite ban, and crypto fundamentals.
Virtual Assets Data Sources and Statistics
Data about virtual assets can be obtained from various sources including:
- World bank: https://openknowledge.worldbank.org/
- International Monetary Fund https://www.imf.org/en/Data
- Statista https://www.statista.com/topics/4495/cryptocurrencies/
- Coinranking https://coinranking.com/
- Chainanalysis https://www.chainalysis.com/
- Business insider https://markets.businessinsider.com/cryptocurrencies
- Forbes https://www.forbes.com/
- Others
Key Fatcs About Virtual Assets Worldwide
Various key facts about virtual assets are available. Selected ones include number of users worldwide, total world market capitalization, daily traded volume, the most popular virtual asset, number of available types of virtual assets, number of people who owns virtual assets and country with largest numbers of crypto users.
Figure 2. Key facts about Virtual Assets
Crypto Users |
300+ million |
Crypto Market Cap |
$2.17 trillion |
Traded Crypto Daily |
$112 billion |
Most Popular Crypto |
Bitcoin |
% Of Americans Who Own Crypto |
6% |
Types Of Crypto |
6,000 |
Country With The Most Crypto |
India – 100 million users |
Source: https://buybitcoinworldwide.com/cryptocurrency-statistics/
Virtual Assets by Market Capitalisation
Coin ranking provides statistics about the following types of digital assets:
- NFT Non-fungible token
- DeFi Decentralised Finance
- Gaming
- Stablecoins
- Metaverse
Table 3. Ranking of top 50 Virtual Assets by market capitalisation
(date: 11 October 2022)
1 Bitcoin BTC |
$ 19,167.96 |
$ 367.78 billion |
-1.26% |
2 Ethereum ETH |
$ 1,295.32 |
$ 158.62 billion |
-1.76% |
3 Tether USD USDT |
$ 1.001 |
$ 68.42 billion |
-0.05% |
4 USDC |
$ 1.001 |
$ 46.11 billion |
-0.06% |
5 Binance Coin BNB |
$ 273.08 |
$ 39.57 billion |
-1.67% |
6 XRP XRP |
$ 0.5041 |
$ 25.19 billion |
-5.91% |
7 Binance USD BUSD |
$ 1.002 |
$ 21.70 billion |
-0.01% |
8 Cardano ADA |
$ 0.4065 |
$ 12.65 billion |
-3.84% |
9 Solana SOL |
$ 32.15 |
$ 11.50 billion |
-1.79% |
10 Dogecoin DOGE |
$ 0.05991 |
$ 8.18 billion |
-3.40% |
11 Polkadot DOT |
$ 6.306 |
$ 7.27 billion |
-2.21% |
12 Polygon MATIC |
$ 0.8295 |
$ 7.27 billion |
+1.25% |
13 Dai DAI |
$ 1.001 |
$ 6.29 billion |
+0.02% |
14 Shiba Inu SHIB |
$ 0.00001043 |
$ 6.15 billion |
-5.27% |
15 TRON TRX |
$ 0.06350 |
$ 5.86 billion |
+1.70% |
16 Wrapped Ether WETH |
$ 1,295.32 |
$ 5.28 billion |
-1.95% |
17 Uniswap UNI |
$ 6.329 |
$ 4.92 billion |
-4.11% |
18 Avalanche AVAX |
$ 16.32 |
$ 4.84 billion |
-3.45% |
19 PancakeSwap CAKE |
$ 4.514 |
$ 4.23 billion |
-0.91% |
20 OKB OKB |
$ 15.92 |
$ 4.01 billion |
+2.39% |
21 Cosmos ATOM |
$ 12.56 |
$ 3.92 billion |
-4.30% |
22 Litecoin LTC |
$ 52.79 |
$ 3.74 billion |
-1.42% |
23 FTX Token FTT |
$ 23.66 |
$ 3.16 billion |
-1.57% |
24 Ethereum Classic ETC Worst in 24h |
$ 24.11 |
$ 2.81 billion |
-10.28% |
25 Monero XMR |
$ 142.85 |
$ 2.60 billion |
-1.98% |
26 Stellar XLM |
$ 0.1253 |
$ 2.53 billion |
-2.35% |
27 Algorand ALGO |
$ 0.3229 |
$ 2.27 billion |
-4.18% |
28 Bitcoin BEP2 BTCB |
$ 19,215.98 |
$ 2.16 billion |
-1.46% |
29 Bitcoin Cash BCH |
$ 112.32 $ 2.15B |
$ 2.15 billion |
-3.84% |
30 Cronos CRO |
$ 0.1046 |
$ 2.11 billion |
-1.84% |
31 NEAR Protocol NEAR |
$ 3.312 |
$ 2.02 billion |
-5.39% |
2 Terra Classic LUNC |
$ 0.0002886 |
$ 1.90 billion |
-5.09% |
33 WEMIX TOKEN WEMIX |
$ 1.733 |
$ 1.73 billion |
-2.74% |
34 EnergySwap ENS |
$ 16.26 |
$ 1.64 billion |
-6.61% |
35 Flow FLOW |
$ 1.577 |
$ 1.64 billion |
-6.73% |
36 Filecoin FIL |
$ 5.193 |
$ 1.54 billion |
-4.00% |
37 VeChain VET |
$ 0.02294 |
$ 1.53 billion |
-0.60% |
38 Quant QNT |
$ 155.00 |
$ 1.51 billion |
-1.66% |
39 Decentraland MANA |
$ 0.6750 |
$ 1.48 billion |
-2.32% |
40 Internet Computer (DFINITY) ICP |
$ 5.393 |
$ 1.44 billion |
-7.35% |
41 Hedera HBAR |
$ 0.05901 |
$ 1.44 billion |
-1.57% |
42 Immutable X IMX |
$ 0.6964 |
$ 1.39 billion |
-4.88% |
43 Frax FRAX |
$ 0.9997 |
$ 1.36 billion |
-0.05% |
44 Elrond EGLD |
$ 56.91 |
$ 1.35 billion |
+1.55% |
45 Tezos XTZ |
$ 1.381 |
$ 1.26 billion |
-3.02% |
46 The Sandbox SAND |
$ 0.8155 |
$ 1.23 billion |
-1.79% |
47 Chiliz CHZ |
$ 0.1934 |
$ 1.15 billion |
-9.92% |
48 Lido DAO Token LDO |
$ 1.325 |
$ 1.07 billion |
-8.84% |
49 Huobi Token HT |
$ 5.159 |
$ 1.06 billion |
+26.33% |
50 Aave AAVE |
$ 74.04 |
$ 1.05 billion |
-1.75% |
Source: https://coinranking.com/
Key Statistics About a Virtual Asset
Key statistics about a virtual asset include the base and quote currency, the rank, and trading volume.
Table 4. Sample statistics about a virtual asset
Key Statistics About Ethereum12 October 2022 |
|
Ethereum (ETH) is a global, public decentralized blockchain designed to run peer-to-peer smart contracts. It allows developers to deploy all sorts of decentralized applications (Dapps), without the interference of third parties. Ethereum is also used for its own cryptocurrency ether. Ethereum is now the world’s second-most valued cryptocurrency platform. |
|
Price to USD |
$ 1,298.87 |
Price to BTC |
0.0679 BTC |
Rank |
2 |
24h volume |
$ 8.31 billion |
Market cap |
$ 158.98 billion |
Fully diluted market cap |
$ 159.45 billion |
All-time high (daily avg.) |
$ 4,896.88 |
Source: https://coinranking.com/
Best Crypto Currencies for Investment
Forbes lists the 10 best crypto currencies to invest in for year 2022.
- Bitcoin (BTC) – Market cap over $846 billion: Created in 2009, Bitcoin (BTC) is the original cryptocurrency. As with most cryptocurrencies, BTC runs on a blockchain, or a ledger distributed across a network of thousands of computers.
- Ethereum (ETH) – Market cap over $361 billion: Both a cryptocurrency and a blockchain platform, Ethereum is used by program developers for its smart contracts applications that automatically execute when conditions are met.
- Tether (USDT) – Market cap over $79 billion: Unlike some other forms of cryptocurrency, Tether is a stablecoin, meaning it is backed by fiat currencies like United States dollars and the Euro.
- Binance Coin (BNB) – Market cap over $68 billion: The Binance Coin is a form of cryptocurrency that can be used to trade and pay fees on Binance, one of the largest crypto exchanges in the world.
- XRP (XRP) – Market cap over $37 billion: Created by some of the same founders as Ripple, a digital technology and payment processing company, XRP can be used on that network to facilitate exchanges of different currency types, including fiat currencies and other major cryptocurrencies.
- Terra (LUNA) – Market cap over $34 billion: Terra is a blockchain payment platform for stablecoins that relies on keeping a balance between two types of cryptocurrencies.
- Cardano (ADA) – Market cap over $33 billion: Cardano is notable for its early embrace of proof-of-stake validation. Cardano also works like Ethereum to enable smart contracts and decentralized applications, which are powered by ADA, its native coin.
- Solana (SOL) – Market cap over $33 billion: Developed to help power decentralized finance (DeFi) uses, decentralized apps (DApps) and smart contracts, Solana runs on a unique hybrid proof-of-stake and proof-of-history mechanisms that help it process transactions quickly and securely.
- Polkadot (DOT) – Market Cap over $22 billion: Polkadot (DOT), founded in the year 2016, is a unique blockchain interoperability protocol designed to connect different chains together. It also allows exchanging data and processing transactions for parachains, or parallel blockchains without compromising their security. Developers can create their own blockchains while using the Polkadot security.
- Litecoin (LTC) – Market Cap: Over $9 billion: Litecoin (LTC), is an open-source blockchain project launched in 2011. LTC is frequently considered as silver compared to Bitcoin’s gold.
Future of Virtual Assets
Advances in technology, low returns, in real terms, on traditional assets such as equities, fixed income instruments, real estate among others, as well as the need for greater financial inclusion will increase the focus on virtual assets globally. Virtual assets are making new investment categories possible and even accessible to retail investors. The mainstreaming of the virtual asset market is an inevitable trend with the potential to transform financial markets significantly but also with attendant risk. Due to their digital nature, investors in virtual assets are directly exposed to fraud, theft and cyber-attacks. Similarly, the virtual asset market is also prone to higher than usual risk of market manipulation, market abuse, and insider dealing by market participants. Hence, it is becoming increasingly exigent to balance the need to explore the benefits from usage of virtual assets as well as protecting investors and the financial system at large. The inherent risky nature of virtual assets underscores the need for proper investor education on the workings of the virtual asset space as well as an appropriate and robust regulatory framework to safeguard the integrity of the financial system and ensure the participation of only reputable players in the market.
Various forecast from financial experts around the world attempt to predict the future of virtual assets. Our predictions inspired from analysis by KPMG and Hong Kong Securities & Futures Commission (SFC) are:
- More Virtual Assets Service Providers VASPs: In the future more Virtual Assets Service Providers VASPs may be licensed.
- Integration of Virtual Assets Service Providers VASPs in the financial ecosystem: There are signs of a new era where VASPs may become part of the traditional financial ecosystem.
- Institutionalisation of Virtual Assets Service Providers VASPs: In the next years, we expect to see more VASPs follow the institutionalization route.
- Virtual Assets innovation: New virtual assets innovations, business models, and fast product development will be witnessed in the future.
- More virtual assets services: Traditional financial institutions will add to the competition, setting up their own virtual asset services.
- New Central Bank Digital Currencies (CBDC): New digital currencies will be developed across many jurisdictions. Various Central Bank Digital Currency (CBDC) projects in various stages of maturity will be underway around the globe. China’s digital Yuan is a prominent example.
- New trends: New trends will emerge, such as tokens that allow for fractional ownership of less liquid assets (i.e. real estate, carbon or art), driving liquidity premiums and diversification. Other trends include additional services such as professional brokerage services and investment banks dedicated to virtual assets.
- Need for more governance: Many of the operational steps are required to make Virtual Assets Service Providers (VASPs) mature enough for institutionalization. For VASPs to succeed, customer engagement, regulatory compliance, clearing and settlement, custody and governance are all necessary in the future.
- New technologies: New technologies, like the metaverse, will be developed with great impact on virtual assets services and development.
Conclusion and Road Ahead
The global market of virtual assets is growing rapidly. More efforts should be undertaken to consolidate global data and information about virtual assets.
The increased adoption of the virtual asset market has elicited concerns as to its implications for consumer and investor protection, including issues about data privacy and security; financial stability and systemic risk; money laundering and crime; national risk; the ability to exercise human rights; and financial inclusion. These developments highlight the need to establish a regulation and governance framework to embrace the growth in virtual assets market.
Hence, we propose for Arab countries to establish local ministries that looks after virtual assets and digital economy issues. The role of a local ministry for virtual assets is to follow up the development of virtual assets and control the growth of the virtual assets market and provide the needed protection, assistance and advice to the investor. The United Arab Emirates established a ministry for one kind of technology which is Artificial Intelligence, however, establishing a ministry for virtual assets is a more important and crucial step to be undertaken.
The various tasks that can be undertaken by a ministry of virtual assets include:
· Gathering data resources about virtual assets
· Conducting advanced analytics about virtual assets
· Monitoring the Virtual assets market
· Regulating virtual assets
· Issuing licenses for Virtual Assets Service Providers VASP
· Developing and supporting training programs to up skills and competences in areas related to virtual assets
· Establishing cooperation at a global level