According to industry executives and financial sources, crypto firms in the United Arab Emirates (UAE) are being inundated with requests to liquidate billions of dollars in virtual currency as Russians seek a safe haven for their wealth.
According to the sources, some clients are utilizing bitcoin to invest in real estate in the UAE, while others want to use local firms to convert their virtual currency into physical currency and store it elsewhere.
In the last ten days, one crypto firm has received numerous requests from Swiss brokers seeking to liquidate billions of dollars in bitcoin because their clients are concerned that Switzerland will freeze their assets, according to one executive, adding that none of the requests had been for less than $2 billion.
“We’ve had like five or six in the past two weeks. None of them have come off yet – they’ve sort of fallen over at the last minute, which is not rare – but we’ve never had this much interest,” the executive said, adding that his firm normally receives an inquiry for a large transaction once a month.
“We have one guy – I don’t know who he is, but he came through a broker – and they’re like, ‘we want to sell 125,000 bitcoin’. And I’m like, ‘what? That’s $6 billion guys’. And they’re like, ‘yeah, we’re going to send it to a company in Australia’,” the executive said.
Switzerland’s financial market supervisor declined to comment on cryptocurrency transaction volumes
Crypto assets are subject to the same sanctions and restrictions that Switzerland has imposed on “regular” Russian assets and individuals, according to the country’s economic affairs secretariat (SECO). If a person is sanctioned, their crypto assets must likewise be frozen in Switzerland.
The UAE’s refusal to take sides between Western allies and Moscow has signaled to Russians that their money is safe there. Dubai, the Gulf’s financial and business center 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 signaled to Russians that their money is safe there.
One real estate broker, whose company has partnered with a cryptocurrency service to help people buy property, said: “We’ve been seeing a lot of Russians and even Belarusians coming to Dubai and bringing whatever they can bring, even in crypto.”
Are Russians finding a way to evade sanctions?
A financial source in the UAE confirmed that Russians were buying property in Dubai, using crypto as a way of getting their money out of other jurisdictions and into the Gulf state.
Cryptocurrency exchanges have announced that they are suspending the accounts of Russians sanctioned by the West over Moscow’s invasion of Ukraine, which Russia refers to as a “special operation,” while providing few details.
Major exchanges like Coinbase and Binance have stated that they are taking precautions to guarantee that cryptocurrency is not used to circumvent sanctions and that they are working with law authorities on the matter.
Nonetheless, because cryptocurrency provides users with a high level of anonymity, European countries such as Germany and Estonia have asked for stricter control this week to close any gaps that could allow sanctions to be circumvented.
Three Western diplomats said they were increasingly alarmed by the number of Russians who in recent weeks were seeking a refuge in the UAE for their fortunes, including in property, and were wary that some could be acting on behalf of those under sanctions.
Two of the diplomats said they were skeptical that the UAE would crack down on Russian wealth in the Gulf state, which they said was predominantly 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, understood the implications for its reputation and would take action.
The UAE was put on a “grey list” this month for increased monitoring by financial crime and money laundering watchdog the Financial Action Task Force (FATF).
The FATF cited risks in certain industries, including real estate agents and precious metals dealers. Dubai adopted a virtual assets law this week and established a regulator. The UAE’s regulator said it was close to issuing regulations and has consulted on money laundering risks in the sector.
The Dubai government’s media office and the UAE central bank did not immediately respond to requests for comment.
The UAE’s Foreign Ministry said it had no further comment beyond previous statements that the government has a “strong commitment” to working with FATF on areas for improvement in its anti-money laundering and counter-terrorism financing regime.
Why UAE real estate is attractive to Russians
Some experts say the relative transparency of cryptocurrency transactions, which are recorded on the blockchain ledger that underpins bitcoin and other tokens, makes large-scale sanctions evasion difficult.
The U.S. Treasury said on Monday that sanctions-busting using crypto was “not necessarily practicable,” and called for vigilance from companies in the industry.
According to two sources familiar with the situation, UAE companies were concerned about their reputations when doing business with Russians, but saw the state’s abstention at the United Nations Security Council, when Russia vetoed a resolution condemning its invasion of Ukraine, as a signal that they should not impose restrictions on Russians.
The United Arab Emirates, which has grown closer to Russia in recent years, has not matched Western-imposed sanctions, and its central bank has offered no advise on the matter.
Dubai, a major tourist destination, has long been popular with Russians, who were among the top visitors and real estate buyers even before the war and subsequent sanctions wreaked havoc on the Russian economy.
Apurv Trivedi of Healy Consultants, which advises on setting up businesses, including crypto companies, said they had definitely been getting more interest from Russian clients.
“They’re basically trying to protect themselves against the inflationary pressures that are happening against the Russian currency. So crypto has been a very good exit for them to manage the risks that they’re facing,” Trivedi said. “It’s a good liquidity provider for them.”
Healy’s Sami Fadlallah said a lot of the money coming from Russia has been moving into Dubai’s real estate, citing both industry talk and their company’s experience.
“People parking their money in dozens of apartments in the Marina, Downtown,” Fadlallah said.
“We’ve seen a lot of Russians hedging their bets against the devaluation of the rouble by moving a lot of assets into crypto. And the UAE is relatively loose in terms of its regulation and authorities over transferring crypto here.”
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