Russians looking for a safe haven for their crypto fortune in UAE
Crypto firms in the United Arab Emirates (UAE) are being flooded with requests to phase out the billion-dollar virtual currency, company officials and financial sources said, as Russians seek a safe haven for their fortunes.
Sources said some clients are using cryptocurrency to invest in real estate in the UAE, while others want to use firms there to convert their virtual money into hard currency and hide it elsewhere.
A crypto firm has received a lot of questions over the past 10 days from Swiss brokers for liquidating billions of dollars worth of bitcoins because their clients fear Switzerland will freeze their assets, an executive said, less any requests. Wasn’t for less. 2 billion dollars.
“We’ve had five or six picks in the last two weeks. None of them have come out yet — they’ve dropped at the last minute, which isn’t rare — but we’ve never had that much interest,” said the executive. , adding that his firm usually receives inquiries for large transactions once a month.
“We have a guy – I don’t know who he is, but he came through a broker – and they’re like, ‘We want to sell 125,000 bitcoins.’ And I’m like, ‘What? That $6. There are billions of people.’. And they’re like, ‘Yeah, we’re going to send this to a company in Australia,'” the executive said.
The Swiss Financial Markets Supervisor declined to comment on cryptocurrency trading volume.
The country’s Secretariat of Economic Affairs (SECO) said in an emailed statement that crypto assets were subject to the same restrictions and measures that Switzerland has imposed on “normal” Russian assets and individuals, so if an individual is approved their Crypto assets must also be frozen. Switzerland.
Dubai, the Gulf’s financial and trade hub and a growing crypto hub, has long been a magnet for the world’s ultra-rich and the UAE’s refusal to take sides between Western allies and Moscow has prompted the Russians That their money is safe there.
A real estate broker whose company has partnered with a cryptocurrency service to help people buy property said: “We are seeing a lot of Russians and even Belarusians coming to Dubai And they’re bringing whatever they can, even in crypto.”
A way out of restrictions?
A financial source in the United Arab Emirates confirmed that Russians were buying property in Dubai, using crypto as a way to get their money out of other jurisdictions and the Gulf state.
Cryptocurrency exchanges have given some details saying they are blocking accounts of Russians sanctioned by the West over Moscow’s invasion of Ukraine, which Russia calls a “special operation”.
Major exchanges such as Coinbase Global Inc. and Binance say they are taking steps to ensure that crypto is not used as a vehicle to evade sanctions, and that they are cooperating with law enforcement on the issue. We do.
Still, as crypto offers users a high degree of anonymity, European countries such as Germany and Estonia have this week called for stricter oversight to plug any loopholes that could allow sanctions to end.
Three Western diplomats said they were more concerned by the number of Russians who have been seeking asylum in the United Arab Emirates in recent weeks over their fortunes, including assets, and were wary of that from those under some sanctions. can work.
Two diplomats said they doubted the UAE would crack down on Russian money in the Gulf state, which they said was mainly held in Dubai, citing the country’s neutral stance in the conflict.
A third said they hoped the UAE, which is also a gold trading hub, would understand the implications of its reputation and take action.
The UAE was this month placed on the “grey list” for increased surveillance by financial crime and money laundering watchdog Financial Action Task Force (FATF).
The FATF cited risks in certain industries, including real estate agents and precious metals dealers. Dubai this week adopted a virtual property law and established a regulator. The UAE regulator said it is close to issuing regulations and has consulted on money laundering risks in the region.
The Dubai government’s media office and the United Arab Emirates’ central bank did not immediately respond to requests for comment.
The UAE’s foreign ministry said it had no further comment than previous statements that the government has a “strong commitment” to working with the FATF in the areas of improving its anti-money laundering and counter-terrorism financing regime.
Marina and Downtown
Some experts say the relative transparency of cryptocurrency transactions, which are recorded on the blockchain ledger that underpins bitcoin and other tokens, makes theft of large-scale sanctions difficult.
The US Treasury said on Monday that eliminating sanctions using crypto is “not necessarily practical”, and called for caution from companies in the industry.
Two sources familiar with the matter said UAE companies had reputational concerns about doing business with the Russians, but sensed the state’s absence on the UN Security Council after Russia denounced its invasion of Ukraine. The proposal was vetoed, a sign that they should not impose sanctions on the Russians. ,
The UAE, which has deepened ties with Russia over the years, has not matched sanctions imposed by Western countries and its central bank has not issued any guidance regarding the measures.
Dubai, a lucrative tourist destination, has long been popular with Russians, who were among the top visitors and buyers of real estate even before the war and ensuing sanctions threw the Russian economy into turmoil.
Apoorva Trivedi of Healy Consultants, who advises setting up businesses including crypto companies, said that they are definitely getting more interest from Russian clients.
Trivedi said, “They are basically trying to protect themselves from inflationary pressures happening against the Russian currency. So crypto has been a very good exit for them to manage the risks they are facing. Huh.” “It’s a good liquidity provider for them.”
Healy’s Sami Fadallah, citing both industry conversations and his company’s experience, said a lot of the money coming from Russia is going to Dubai’s real estate.
“People park their money in dozens of apartments in the marina, downtown,” Mr. Fadallah said.
“We have seen a lot of Russians hedging their bets against the devaluation of the ruble by moving a lot of assets into crypto. And the UAE is relatively lax in terms of its regulation and authorities on transferring crypto here.”