The Egyptian Economic Landscape
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Egypt is a country blessed with natural resources and a unique geographical position. The Suez Canal, one of the busiest maritime routes in the world, plays a critical role in global trade, linking North America and Europe to the Indian Ocean. This makes Egypt a key player in international commerce.
Beyond its economic importance, Egypt is also home to seven UNESCO World Heritage Sites, including the iconic Great Pyramid of Giza, one of the seven wonders of the ancient world. With its rich cultural history and affordable travel costs, driven by the significant devaluation of the Egyptian pound (LE), Egypt remains a top tourist destination.
In terms of human capital, Egypt’s population of 115 million accounts for about 1.4% of the global population. Notably, 60% of the population is under 30, creating a large and youthful workforce poised to enter the job market. However, despite these advantages, Egypt has faced persistent economic challenges for decades.
Poverty remains a major issue, with World Bank data showing a troubling rise from 25.2% of the population living below the poverty line in 2010 to 32.5% in 2017–2018. Additionally, the economy depends heavily on volatile revenue sources like tourism, the Suez Canal, and foreign remittances, leaving it vulnerable to external shocks.
In 2022-2023, remittances had dropped as workers overseas reduced their transfers due to the inflated official exchange rate. Furthermore, events such as the COVID-19 pandemic, the Ukraine war, the Gaza conflict, and recent attacks in the Red Sea have all further strained the economy.
One of the most pressing consequences of these economic pressures has been the dramatic depreciation of the Egyptian pound, which has lost over 70% of its value since early 2022. This decline places it among the six worst-performing currencies globally so far this year, further adding to the financial challenges faced by both businesses and everyday Egyptians. Consequently, many are turning to cryptocurrencies, thereby increasing the rate of crypto adoption in Egypt.
Egypt is currently enduring its most severe economic crisis since the 2011 revolution, characterised by a weak currency, soaring inflation and capital flight, all signs of a deepening debt crisis.
Current State of Crypto Adoption in Egypt
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Cryptocurrencies have seen a significant rise in popularity across the MENA region in recent years. This surge can be attributed to several factors, including a large unbanked population, economic instability, and a growing desire for financial independence.
According to a report by Chainalysis, the MENA region is now one of the fastest-growing cryptocurrency markets globally. This is seen by the notable increase in crypto transactions, especially in countries like the UAE, Saudi Arabia, and Egypt.
In Egypt, however, cryptocurrency adoption faces major legal challenges. Law No. 194 of 2020 grants the Central Bank of Egypt (CBE) extensive authority over digital currencies, impacting the legitimacy of cryptocurrency mining and trading. The purpose of this law is to maintain financial stability and prevent illegal activities such as money laundering and terrorist financing.
Additionally, in 2018, Egypt’s Dar al-Ifta, its primary Islamic legislator, and Egypt’s Grand Mufti, Shawki Allam, declared that cryptocurrencies, particularly Bitcoin, were forbidden under Islamic law. This religious decree classified Bitcoin transactions as haram (prohibited) due to concerns that they could be used to evade taxes, launder money, and finance terrorism.
The Central Bank of Egypt has also reiterated its strong warnings against engaging with cryptocurrencies in any form, whether through individuals, companies, applications, or digital platforms.
It emphasizes that no licenses have been issued for trading cryptocurrencies in the Egyptian market due to the significant risks involved. These risks include not only the high volatility and price fluctuations of cryptocurrencies but also their potential use in financial crimes and cyberattacks.
Moreover, cryptocurrencies are not backed by any central bank or official issuing authority that can be held accountable, meaning there is no issuing body to ensure their stability or protect users’ rights. From a security standpoint, the Ministry of Foreign Affairs has also identified virtual and encrypted currencies as a potential threat to Egypt’s national security.
Egypt’s anti-money laundering regulations also play a crucial role in monitoring cryptocurrency activities. These laws aim to mitigate the risks associated with the anonymity of digital currencies, further complicating the legal landscape for cryptocurrency mining in Egypt.
Despite these barriers, crypto adoption in Egypt is growing. According to data from Triple-A, over 3 million Egyptians now own cryptocurrency. Exchanges like Binance, which comply with Know Your Customer (KYC) requirements, allow users in Egypt to trade cryptocurrencies using the Egyptian pound (EGP) and other fiat currencies.
Additionally, The number of cryptocurrency users in Egypt is expected to reach 11.3 million by 2025, with a user penetration rate of 9.82% in 2024, which is projected to remain around 9.72% by 2025.
Egypt is, however, now exploring its own central bank digital currency (CBDC). Recent reports suggest that the Egyptian government is working on the e-pound, expected to be introduced by 2030 as part of its broader economic strategy.
The Central Bank of Egypt also mentioned the development of a CBDC and an electronic Know Your Customer (e-KYC) system in its 2022 Financial Stability Report, with the primary aim of preventing widespread cryptocurrency adoption.
Factors Driving Crypto Adoption in Egypt
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As economic conditions in Egypt become increasingly challenging, many Egyptians are exploring cryptocurrencies as an alternative financial solution. Here are some key factors driving this trend:
Hedge Against Inflation
The rapid depreciation of the Egyptian Pound has led to severe inflation, eroding the purchasing power of both individuals and businesses. Traditional savings accounts and other local investment instruments have proven inadequate in keeping up with inflation.
This development has prompted many Egyptians to explore cryptocurrencies as a more reliable store of value. Popular digital assets such as Bitcoin (BTC), Ethereum (ETH), and stablecoins like USDT are increasingly seen as viable options to preserve wealth.
The idea of a decentralized currency and investing in it is a bit like investing in the future. Ahmed Mostafa, a computer science graduate from the American University in Cairo.
Political and Economic Instability
Egypt’s economy is highly vulnerable to external shocks, including the COVID-19 pandemic, the Ukraine war, the Gaza conflict, and recent attacks in the Red Sea. These events have disrupted key sectors, such as tourism and international trade, increasing the financial burden on the country.
In this unstable environment, cryptocurrencies offer Egyptians a way to protect their wealth from volatility and capital controls.
Political unrest and uncertainty can also lead to a lack of confidence in the local economy. In such an environment, cryptocurrencies offer an avenue for individuals to protect their assets outside of traditional banking systems, which may be perceived as unstable or untrustworthy.
Increasing Use for Cross-Border Transactions
Cryptocurrencies offer cheaper and faster alternatives to traditional remittance services, bypassing intermediaries and reducing transaction fees. By using digital currencies, individuals can bypass the high fees associated with traditional banking and transfer services.
Platforms like Binance P2P are increasingly popular, allowing people to send and receive money directly in digital currencies. As sending money via these platforms provides financial relief for families dependent on foreign income, crypto adoption in Egypt continues to grow.
Also significant in the country is the use of cryptocurrency for remittances — the country’s national bank has already begun a project to build a crypto-based remittance corridor between Egypt and the UAE, where many Egyptian natives work.
Growing Interest in Financial Independence
Many Egyptians are drawn to cryptocurrencies due to the desire for greater financial autonomy. The decentralized nature of cryptocurrencies allows individuals to have more control over their finances without reliance on governmental or banking institutions.
Challenges to Crypto Adoption in Egypt
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While there is growing interest in cryptocurrencies among Egyptians, several challenges hinder widespread adoption. Here are some of the key obstacles:
Regulatory Restrictions
One of the biggest hurdles facing crypto adoption in Egypt is regulatory ambiguity. The Central Bank of Egypt (CBE) has not yet developed clear policies around cryptocurrency usage, and it continues to discourage the use of digital currencies for fear of financial instability, money laundering, and fraud.
Currently, trading in cryptocurrencies is prohibited by law without explicit permission from the CBE. This legal uncertainty makes many individuals and businesses hesitant to adopt crypto, as they fear penalties or restrictions in the future.
Additionally, banks and financial institutions are reluctant to engage with crypto-related businesses due to the lack of regulatory guidance. This stifles innovation and prevents the integration of crypto into mainstream financial services. Until clearer regulations are introduced, the potential for growth will remain limited.
Lack of Consumer Protection
Cryptocurrencies are not backed by any central authority or financial institution, which raises concerns about consumer protection.
Without a regulatory body to oversee transactions, users may be vulnerable to scams, fraud, and market manipulation. The absence of recourse in case of losses thus limits crypto adoption in Egypt.
Cultural and Religious Opposition
As previously mentioned, religious authorities in Egypt have declared cryptocurrencies haram (forbidden) under Islamic law. This religious opposition can significantly impact public perception and acceptance of digital currencies, especially among the devout Muslim population.
The cultural stigma surrounding crypto may prevent individuals from exploring its potential benefits.
Infrastructure and Technological Barriers
Although internet access is improving across Egypt, rural areas still experience limited connectivity. Since crypto transactions rely heavily on internet-based platforms, people in remote areas face challenges accessing crypto services. In addition, many Egyptians use basic mobile phones that lack the capabilities needed to operate crypto wallets or trading apps.
Even in urban areas, technological infrastructure can be unreliable, with frequent power outages and network disruptions that hinder digital transactions. These issues create obstacles for users and businesses trying to adopt crypto solutions, limiting the reach of cryptocurrencies beyond major cities.
Market Volatility
Cryptocurrencies are known for their extreme price fluctuations, which can create a sense of risk and uncertainty among potential investors. Many people in Egypt may be reluctant to invest in a market that can swing dramatically in value over short periods.
The lack of financial literacy around managing risk also contributes to hesitation. Similarly, individuals who are unfamiliar with market trends may find it difficult to navigate the complexities of crypto trading, which requires knowledge of technical analysis and price movements.
The Future of Crypto in Egypt
As Egypt navigates the use of cryptocurrency, several factors suggest that the future of digital currencies in the country could be both promising and complex.
Here are some key aspects that may shape the future of crypto adoption in Egypt:
Regulatory Reforms and Government Engagement
Clearer regulatory frameworks are likely to emerge in the near future as the Central Bank of Egypt (CBE) and government agencies begin recognizing the economic potential of crypto.
Currently, the lack of regulation creates uncertainty, but progressive laws could encourage the use of digital assets while ensuring safety and compliance.
If Egypt follows the example of countries that introduce well-defined rules for crypto trading and taxation, it could attract crypto exchanges, fintech startups, and foreign investors to operate within its borders.
Regional Trends and Global Influence
Egypt is part of the MENA region, which is experiencing rapid growth in cryptocurrency adoption. This regional trend can influence local attitudes towards crypto, as neighboring countries develop their digital currency markets and regulatory frameworks.
Global trends, such as increased institutional investment in cryptocurrencies, could also shape perceptions and adoption in Egypt.
Increased Use of Crypto in Cross-Border Trade and Remittances
As economic instability persists and the Egyptian pound continues to face devaluation, crypto could become an attractive option for cross-border transactions.
Exporters and importers may start using stablecoins and other cryptocurrencies to hedge against currency fluctuations and conduct international trade more efficiently.
This trend could gain momentum if financial institutions integrate crypto solutions into their cross-border payment systems. Moreover, as crypto adoption spreads across the Middle East and North Africa, Egypt could become part of a regional crypto network, facilitating seamless trade and remittance flows.
Resilience Against Economic Shocks
With Egypt’s economy vulnerable to external shocks, crypto offers an opportunity to diversify financial options. In times of crisis, when inflation rises and currency values drop, cryptocurrencies could serve as a store of value and a hedge against economic instability.
If businesses and individuals adopt crypto during economic downturns, the use of digital assets could become more widespread. Over time, this resilience could transform the perception of crypto from a speculative investment to a reliable financial tool.
Conclusion
Egypt stands on the edge of a financial transformation, with cryptocurrencies offering a new path toward economic resilience and innovation. While crypto adoption in Egypt is still in its early stages, the potential benefits are hard to ignore.
However, the journey toward widespread crypto adoption is not without obstacles. Regulatory restrictions, security concerns, cultural opposition, and a general lack of understanding among the public pose significant barriers. Despite these challenges, there is a glimmer of hope in the country.
The Central Bank of Egypt’s exploration of a Central Bank Digital Currency (CBDC) and the growing interest among younger generations indicate a shift toward greater acceptance of digital currencies. Ultimately, the future of crypto in Egypt rests on finding a balance between regulation and innovation.
