According to company 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 fortunes.
According to the sources, some clients are using cryptocurrency to invest in real estate in the UAE, while others want to use firms in the UAE to convert their virtual money into hard currency and stash it elsewhere.
One crypto firm has received numerous requests in the last 10 days from Swiss brokers seeking to liquidate billions of dollars in bitcoin because their clients are afraid Switzerland will freeze their assets, according to one executive, who added that none of the requests were for less than $2 billion.
In the last two weeks, we’ve had about five or six. None of them have yet come off – they’ve sort of fallen over at the last minute, which is not uncommon – but we’ve never had this much interest,” the executive said, adding that his firm receives an inquiry for a large transaction once a month on average.
“We have one guy – I’m not sure who he is, but he came through a broker – and they say, ‘We want to sell 125,000 bitcoin.'” And I’m like, ‘Wait, what?’ Guys, that’s $6 billion. “And they’re like, ‘yeah, we’re going to send it to an Australian company,'” the executive explained.
Dubai, the Gulf’s financial and business center and a growing crypto hub have long attracted 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.
“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 partnered with a cryptocurrency service to help people buy property.
How can you avoid sanctions?
A financial source in the UAE confirmed that Russians were purchasing property in Dubai, using cryptocurrency to transfer funds from other jurisdictions to the Gulf state.
While providing few details, cryptocurrency exchanges have stated that they are blocking the accounts of Russians sanctioned by the West due to Moscow’s invasion of Ukraine, which Russia refers to as a “special operation.”
Major exchanges such as Coinbase and Binance have stated that they are taking steps to ensure that cryptocurrency is not used to circumvent sanctions and that they are working with law enforcement on the issue.
Nonetheless, because cryptocurrency provides users with a high level of anonymity, European countries such as Germany and Estonia have this week called for tighter oversight to close any loopholes that could allow sanctions evasion.
Three Western diplomats said they were increasingly concerned by the number of Russians seeking refuge in the UAE for their fortunes, including property, in recent weeks, and were concerned that some may be acting on behalf of those subject to sanctions.
Downtown and the marina
According to some experts, the relative transparency of cryptocurrency transactions, which are recorded on the blockchain ledger that supports bitcoin and other tokens, makes large-scale sanctions evasion difficult.
The US Treasury said on Monday that using cryptocurrency to circumvent sanctions was “not necessarily practicable,” and it urged companies in the industry to be cautious.
According to two sources familiar with the situation, UAE companies had reputational concerns about 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.