The Bitcoin Policy Institute published a report showing that annual crypto activity across the Middle East and North Africa reached roughly $350 billion in 2025-2026. That is more than triple the $100 billion recorded in 2022. Researchers describe it as one of the rare cases where war did not trigger a mass exodus of money from an affected region. Capital that would once have left the country is instead flowing into digital assets.
Where the $350 billion came from
In a report published on September 4, the Bitcoin Policy Institute measured blockchain transaction volume across the MENA region. Over four years, the figure more than tripled. Researchers attribute this not only to economic pressure and growing regulatory frameworks in the Gulf, but also to the direct impact of fighting between Israel and Iran, which has continued since June 2025.
The Bitcoin Policy Institute, a US research organization, regularly studies how the crypto market affects macroeconomics. The term MENA covers dozens of countries at very different stages of development, from wealthy Gulf monarchies to states under sanctions or at war. That is why regional averages tend to hide very different realities on the ground.
The report's core finding is simple. Instead of capital fleeing the region, as happened during past conflicts, much of the money stayed in MENA but shifted into digital form. This is not unique to Iran. Rising demand for Bitcoin and dollar-pegged stablecoins as local currencies weakened was also recorded in Egypt, Turkey and Lebanon.
A similar pattern is familiar to Ukraine's own market. After sharp swings in the hryvnia, part of household savings routinely moves into dollar stablecoins. Many people choose to buy USDT with hryvnia before the exchange rate can shift further. The difference is mostly scale. The whole MENA region is talking about billions of dollars in annual turnover.
How the conflict changed investor behavior
When fighting broke out in June 2025, Bitcoin initially traded like any other risk asset and fell alongside equities. The report's authors describe this as a classic risk-off reaction, not the behavior of 'digital gold' that would be expected to gain during geopolitical crises.
In earlier Middle East wars, capital typically fled into physical dollars, real estate or foreign bank accounts. This time, part of that same money stayed in digital form, accessible from anywhere in the world within minutes. For a region with limited access to banking during active fighting, that is now a practical tool rather than a novelty.
The pattern then shifted. Investors moved out of smaller altcoins and concentrated capital in Bitcoin, pushing its share of the crypto market to a one-month high of 64.8%. Its price stabilized even as the fighting continued.
The motivation was fairly practical. People were trying to shield their money from the fallout of the conflict: higher oil prices, faster inflation and rising interest rates. An added factor was that crypto markets trade around the clock, while traditional exchanges closed for weekends and holidays during the sharpest moments of escalation.
In earlier crises, people more often turned to gold, but gold is hard to move across a border quickly during active fighting. Digital assets solve exactly that problem. Transfers take minutes, and holding them requires nothing bigger than a device the size of a credit card.
Who is pulling funds from Iranian exchanges
Chainalysis data shows that after US and Israeli strikes on Iran in late February and early March this year, roughly $10.3 million left Iranian crypto exchanges over three days. The firm notes that these transfers could include ordinary user withdrawals, exchanges managing their own liquidity, and funds tied to state-linked actors.
Against MENA's total $350 billion in annual turnover, $10.3 million over three days looks modest. Still, the figure shows how fast the market can react. Money can leave an exchange within hours of an escalation headline, long before major outlets even cover the story.
- Some transfers likely belong to private holders simply protecting their savings.
- Exchanges themselves shift liquidity between wallets during periods of heavy load.
- Certain transactions are potentially linked to sanctioned entities, which complicates monitoring for regulators.
- A sharp jump in volume alone does not confirm any single one of these explanations without further analysis.
For traders, this means one thing. Spikes in activity on Iranian platforms should be read cautiously, without jumping to conclusions about mass capital flight in either direction.
How the Gulf's biggest players are responding
While Iran remains under pressure, its Gulf neighbors are building up regulatory infrastructure for crypto business. The UAE and Bahrain are actively courting firms with licensing frameworks for exchanges and custody services. The goal is straightforward: turn regional instability into a competitive edge for their own financial hubs.
Just five years ago, the region was associated more with restrictions on crypto business than with licensing programs. That shift has run parallel to traditional financial hubs trying to diversify their economies and reduce reliance on oil revenue.
In May, the parent company of one major exchange received preliminary authorization from Dubai's VARA regulator for broker-dealer and investment management activities. That signals global players view the region as a growth opportunity rather than a risk zone, even though the conflict around Iran is far from over.
"Regional conflicts tend to accelerate capital outflows. The Iran conflict displayed a different dynamic. Instead of exiting the region, a growing share of capital shifted into digital assets."
- Bitcoin Policy Institute researchers, from the report dated September 4, 2026
What this means for the market going forward
The Bitcoin Policy Institute report captures a split within a single region. Countries under sanctions or active conflict are using crypto to preserve capital, while the Gulf's regulated markets are becoming magnets for institutional money.
For Bitcoin and stablecoin holders, demand from MENA is not disappearing, only changing shape. That is an added source of price support worth weighing alongside standard macroeconomic data on rates and inflation. For an ordinary exchange user, the takeaway is simpler. Deep liquidity in Bitcoin and stablecoins across crisis-hit regions supports the broader market that local exchange rates ultimately depend on.
Future Bitcoin Policy Institute reports should show whether this pattern holds if the conflict cools down. For now, researchers see no signs of demand slowing.
Comments
Your email address will not be published. Required fields are marked *