Can UAE be a Safe Haven For Sanctions Against Russia?

Paigambar Mohan Raj
Source: Arabian Business

Sanctions in Russia have left many crypto investors unable to liquidate their assets. More and more companies and exchanges are joining the long list of firms that no longer offer services to Russia. 

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 Global Inc (COIN.O) 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. 

UAE a way out for investors from Russia?

According to industry executives and financial sources, crypto firms in the United Arab Emirates (UAE) are being inundated with requests to sell billions of dollars in cryptocurrencies as Russians seek a safe haven for their assets, as reported by Reuters

According to the sources, some clients from Russia are utilizing cryptocurrencies 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.

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

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.

Dubai, the Gulf’s financial and economic capital and a developing crypto hub, has long attracted the world’s ultra-rich, and the UAE’s refusal to take sides between Western friends and Moscow has signaled the ultra-rich of Russia that their money is secure there.

Investors from Russia 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.

According to one real estate broker, whose firm has joined with a cryptocurrency business to assist consumers in purchasing property,

 “We’ve been seeing a lot of Russians and even Belarusians coming to Dubai and bringing whatever they can bring, even in crypto.”

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