The United States has sanctioned a Dubai-based cryptocurrency exchange accused of facilitating a $4 billion scheme to help Iran evade international sanctions, shortly after Dubai’s own regulator warned that these transactions threatened the integrity of the UAE financial system. A new analysis in Middle East Policy shows that the Emirati effort to become a cryptocurrency hub is part of a broader push by regional states to capitalize on the growing industry without embracing its potential to decentralize economic activity and give citizens and the private sector greater financial autonomy.
Middle East Policy has just published its Summer 2026 double issue, featuring incisive open-access examinations of the Iran War, its causes, and its implications, including what lies ahead in the Strait of Hormuz; how Trump’s transactionalism is backfiring; how the Islamic Revolution upended regional security; Iran’s forward defense in Africa; and the effects of the war on Gulf cooperation with the Asia-Pacific. Many more analyses of vital interest can be found in the table of contents below. If you find this article useful, please forward it to others you believe will benefit. You can register to receive our weekly updates here. And please follow us on the social media platforms X and LinkedIn.
In their analysis of regional cryptocurrency regulation, Bassant Hassib and Fatimah Ayad show that the UAE had previously been placed on the Financial Action Task Force’s “grey list” for deficiencies in combating money laundering and terrorism financing. The Emiratis subsequently strengthened their oversight, including by establishing the Virtual Assets Regulatory Authority in 2022. The authors contend that these moves were part of a determination by the UAE—one of the few Middle Eastern states not to ban crypto—to take advantage of the technology. The state has thus served as a model for the region’s constrained adoption of cryptocurrencies over the past half-decade.
Hassib and Ayad examine the policies of 14 regional states to show that most governments initially sought to block crypto by claiming that its use violates religious tenets and is a boon to criminal activity:
A popular Saudi cleric, Assim Al-Hakeem, issued an edict claiming that cryptocurrency “is an open gate for money laundering, drug money and haram money….Exchange is only permissible in Islam with the condition that it is hand-to-hand, in virtual currencies you don’t have this.” In Iraq, the High Committee for Issuing Fatwas at the Kurdistan Islamic Scholars Union issued a fatwa urging citizens to avoid using digital currency because it is “wrong from an Islamic jurisprudence point of view….Islamic law does not approve virtual currencies….It lacks official guarantee from economic agencies, which means this currency has no international backing. Therefore, any money spent in this regard would be unreliable and unstable. It is like gambling.”
Deploying similar justifications, seven states—Algeria, Egypt, Iraq, Morocco, Qatar, Saudi Arabia, and Tunisia—explicitly banned crypto, and another five did so implicitly: Jordan, Kuwait, Lebanon, Libya, and Oman. Bahrain and the UAE were the exceptions, seeking to channel cryptocurrencies like Bitcoin through state-licensed platforms.
However, the analysis demonstrates, the 12 countries that tried to ban the practice were largely unsuccessful. With cryptocurrency gaining in popularity, authorities came to accept and regulate its use—by employing largely the same discourses they had used in justifying their prohibitions:
The fastest such growth was seen in Saudi Arabia, 154 percent year-over-year, and the government thus introduced several compliance mechanisms. First, crypto users were legally allowed to use only CEX [centralized cryptocurrency exchange] platforms, such as Binance and Rain, that fall under state oversight and adhere to AML/CFT [anti-money laundering and combating the financing of terrorism] laws. Second, to ensure that the trade complied with Islamic finance principles, the state distinguished between “halal” and “haram” practices: Cryptocurrency was not to be used in “gambling, alcohol or adult content” and “decentralized finance protocols,” which may involve interest and speculative trading. The government mandated a payment of zakat, or almsgiving, of 2.5 percent on crypto held in savings for more than one lunar year.
Despite these moves toward liberalization, Hassib and Ayad contend that most of these regional states have not changed “their stances to allow the promise of cryptocurrency to be fulfilled. This was clear in how they repurposed the same discourses regarding terrorism financing, money laundering, and national security to justify new regulations and reassert state control.”
While the authors call for regional policies that can track the use of alternative currencies for money laundering and other crimes, they are most concerned that overregulation is blocking citizens from economic autonomy and potential development. Crypto, they argue, “offers a viable alternative for individuals disadvantaged by limited access to traditional financial institutions, primarily those residing in developing countries.” And the authors contend that digitalizing and decentralizing economic activity can help regional states diversify away from fossil fuels—a goal that has grown more urgent with the US war on Iran.
Middle East Policy, Summer 2026
Special Double Issue!
AMERICA’S WAR ON IRAN
Signals, Red Lines, and Collision: The Israel-Iran Spiral and US Intervention
Buğra Sari—open access!
Trump’s Transactional Diplomacy: Breakthrough or Breakdown?
Guilain Denoeux | Robert Springborg—open access!
Between Ideology and Strategy: The Iranian Revolution and the Reconfiguration of Middle Eastern Security
Alabbas F. Alsudani—open access!
Iran’s Forward Defense in Sub-Saharan Africa
Ariel Limanya Limbu | Ronen A. Cohen—open access!
CONSEQUENCES IN THE GULF
Crisis in the Strait of Hormuz: What Lies Ahead?
Gawdat Bahgat—free to read!
GCC-Asia Pacific Energy Nexus: Navigating Shifts in Demand and Geopolitics
Umud Shokri—open access!
Outwardly Strong, Internally Brittle: Dissecting the MBS Regime
Mohammed Ayoob—free to read!
POLITICAL CONVULSIONS OVER PALESTINE
New Political Actors in Palestine: The Digital Efficacy of Gen Z
Abdalraheem S.H. Shobaki | Mahmoud S.H. Shobaki
Between Fatigue and Fear: West Bank Student Solidarity During the Gaza War
Mert Öztürk / Oqab Jabali
Explaining Saudi Arabia’s Inaction During the Gaza War: Why No Oil Embargo?
Mazaher Koruzhde | Eric Lob—free to read!
From Palestine Ally to Zionist Partner: India-Israel Relations, 2014–2025
Yücel Bulut—open access!
REBUILDING AND RECKONING IN SYRIA
A Heuristic Equation of Transformation, Justice, and Violence in Post-Assad Syria
Zeynep Banu Dalaman—free to read!
Federalism in Post-Assad Syria: Toward Durable Peace in a Pluralist Society
Dilan Okcuoglu—open access!
REGIONAL SOCIAL & ECONOMIC GOVERNANCE
Cryptocurrency Regulation in MENA: From Prohibition to Conditional Legalization
Bassant Hassib | Fatimah Ayad
Fallen Cedar: Lebanon’s Debt Diplomacy, 2015–2020
Kevin Rosier
Plastics Pollution in the Gulf Countries: Problems and Policy Solutions
Richard Rutter et al.
Constructing Social Cohesion in Qatar: National Vision, Strategy, and Constitution
Logan Cochrane et al.
THE ATTRACTIVE POWER OF EAST ASIA
Saudi Arabia’s Deepening Engagement with Asia-Pacific Nations
Ghulam Ali
China’s Hajj-Related Infrastructure Diplomacy with Saudi Arabia
Song Niu | Danyu Wang
Chinese-Arab Scientific Cooperation and Effectiveness
Minglian Long, Yijia Luo, Yi Zhang
BOOK REVIEWS
Lynch, America’s Middle East
Reviewed by Yasir Kuoti
Denoeux, Springborg, and Alaoui, Making Aid Work
Reviewed by Naomi Sakr
Momeni, The Presidential Difference and Iran’s Foreign Policy Under Khatami from 1997 to 2005
Reviewed by Mahmood Monshipouri
Bajoghli et al., How Sanctions Work
Reviewed by Bahram P. Kalviri
Donelli, Power Competition in the Red Sea
Reviewed by Riccardo Gasco
Brownlee and Ghiabi, States Without People
Reviewed by İlhan Bilici
Karam, The Middle East in 1958
Reviewed by Elifnur Düzsöz
Uysal, Class, Capital, State, and Late Development
Reviewed by Yusuf Murteza
Greenberg, The Long War of Ideas
Reviewed by A.R. Joyce