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    Home»Crypto»In search of safe havens, Russians are dumping cryptocurrency in the United Arab Emirates.
    Crypto

    In search of safe havens, Russians are dumping cryptocurrency in the United Arab Emirates.

    Cryptocurrency exchanges claim they are taking precautions to prevent digital currency from being used to circumvent sanctions.
    NxtvertexBy NxtvertexMarch 12, 2022Updated:March 14, 2022No Comments6 Mins Read
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    Image Credits [The Guardian]
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    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 of virtual currency as Russians seek a safe haven for their assets.

    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, who added that none of the requests had been for less than $2 billion.

    “In the last two weeks, we’ve had about five or six.” None of them have come off yet – they’ve all fallen over at the last minute, which isn’t uncommon – but we’ve never had this much interest,” the executive said, adding that his firm receives a significant transaction query once a month.

    “We have one individual – I have no idea who he is, but he came through a broker – who says, ‘We want to sell 125,000 Bitcoin.’ ‘What?’ I think to myself. Guys, that’s $6 billion. “And they’re like, ‘yeah, we’ll send it to an Australian company,'” the executive said.

    The Swiss financial market supervisor refuses to comment on the amount of bitcoin transactions.

    Crypto assets are subject to the same sanctions and restrictions that Switzerland has imposed on “normal” 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.

    Dubai, the Gulf region’s financial and economic center and a developing crypto hub, has long attracted the world’s ultrarich, and the UAE’s refusal to take sides between Western friends and Moscow has signaled to Russians that their money is secure there.

    “We’ve been seeing a lot of Russians and even Belarusians coming to Dubai and bringing whatever they can bring, even in crypto,” said one real estate broker, whose company has teamed with a cryptocurrency service to assist customers acquire property.

    Is there a way out of sanctions?
    Russians were buying property in Dubai, according to a financial source in the UAE, who said they were utilizing cryptocurrency to transfer their money out of other countries and into the Gulf state.

    Cryptocurrency exchanges have announced that they are suspending the accounts of Russians sanctioned by the West as a result of Moscow’s invasion of Ukraine, which Russia refers to as a “special military operation,” while providing little details.

    Major exchanges like Coinbase Global Inc and Binance have stated that they are taking precautions to guarantee that cryptocurrency is not used to avoid sanctions, and that they are working with law authorities on the matter.

    Nonetheless, because crypto provides users with a high level of anonymity, European countries such as Germany and Estonia have urged for stronger regulation to close any vulnerabilities that could allow sanctions-busting.

    Three Western officials said they were becoming increasingly concerned about the growing number of Russians seeking refuge in the UAE for their fortunes, notably in property, in recent weeks, and were concerned that some of them might be acting on behalf of people subject to sanctions.

    Two of the diplomats expressed reservations about the UAE cracking down on Russian riches in the Gulf state, which they claimed was primarily held in Dubai, noting the UAE’s neutral posture in the conflict.

    A third expressed hope that the UAE, which is also a gold trading centre, was aware of the consequences and would take action.

    The UAE was placed on a “grey list” this month by the Financial Action Task Force, a watchdog for financial crime and money laundering (FATF).

    Risks in specific sectors, including as real estate and precious metals, were highlighted by the FATF. This week, Dubai passed a virtual assets law and established a regulatory body. The UAE’s regulator said it was close to adopting legislation and has had consultations on the sector’s money laundering dangers.

    Requests for response were not immediately returned by the Dubai government’s media office or the UAE Central Bank.

    The UAE’s foreign ministry said it had no more comment beyond prior assertions that the government is “strongly committed” to working with the FATF on areas where its anti-money laundering and counter-terrorism funding regime should be improved.

    Downtown and the marina
    According to some analysts, large-scale sanctions evasion is difficult due to the relative transparency of cryptocurrency transactions, which are recorded on the blockchain ledger that supports Bitcoin and other tokens.

    The US Treasury stated on Monday that utilizing crypto to circumvent sanctions was “not necessarily practicable,” and urged companies in the field to be cautious.

    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.

    ‘They’re attempting to defend themselves.’
    According to Apurv Trivedi of Healy Consultants, which advises on the formation of enterprises, including crypto corporations, Russian clients have shown increased interest.

    “They’re basically trying to protect themselves from the rising inflationary pressures on the Russian currency.” So crypto has been a great way for them to control the risks they’re dealing with,” Trivedi added. “It’s a good source of liquidity for them.”

    According to Healy’s Sami Fadlallah, a lot of the money flowing from Russia is going into real estate in Dubai, citing both industry discussion and their own experience.

    “There are dozens of apartments in the Marina and Downtown where people are parking their money,” Fadlallah remarked.

    “We’ve seen a lot of Russians hedge their bets against the rouble’s depreciation by putting a lot of assets into cryptocurrency. And the UAE is relatively lax in terms of regulation and oversight when it comes to moving cryptocurrency.”

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