Russians liquidating crypto in the UAE

DUBAI, March 11 (Reuters) - Crypto firms in the United Arab Emirates (UAE) are being deluged with requests to liquidate billions of dollars of virtual currency as Russians seek a safe haven for their fortunes, company executives and financial sources said.

Some clients are using cryptocurrency to invest in real estate in the UAE, while others want to use firms there to turn their virtual money into hard currency and stash it elsewhere, the sources said

One crypto firm has received lots of queries in the past 10 days from Swiss brokers asking to liquidate billions of dollars of bitcoin because their clients are afraid Switzerland will freeze their assets, one executive said, 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.

The country's economic affairs secretariat (SECO) said in an emailed statement that crypto assets were subject to the same sanctions and measures Switzerland has imposed on "normal" Russian assets and individuals, so if a person is sanctioned their crypto assets must also be frozen in Switzerland.

Dubai, the Gulf's financial and business centre 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 signalled 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."

WAY OUT OF 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 said, while giving few details, that they are blocking the accounts of Russians sanctioned by the West over Moscow's invasion of Ukraine, which Russia calls a "special operation". read more

Major exchanges such as Coinbase Global Inc (COIN.O) and Binance say they are taking steps to ensure that crypto is not used as a vehicle to evade sanctions, and that they collaborate with law enforcement on the issue.

Still, as crypto offers users a high degree of anonymity, European countries such as Germany and Estonia have this week called for tighter oversight to snuff out any loopholes that could allow sanctions busting.

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 sceptical 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). read more

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. read more

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 remark past proclamations that the public authority has a "solid responsibility" to working with FATF on regions for development in its enemy of tax evasion and counter-psychological warfare financing system.

MARINA AND DOWNTOWN

A few specialists say the general straightforwardness of digital money exchanges, which are recorded on the blockchain record that supports bitcoin and different tokens, makes huge scope sanctions avoidance troublesome.

The U.S. Depository said on Monday that sanctions-busting utilizing crypto was "not really practicable", and called for carefulness from organizations in the business.

Two sources acquainted with the matter said UAE organizations had reputational worries about working with Russians, yet felt the state's abstention at the U.N. Security Council, when Russia rejected a goal denouncing its attack of Ukraine, was a sign they ought not force limitations on Russians. understand more

The UAE, which has extended attaches with Russia throughout the long term, has not matched sanctions forced by Western countries and its national bank has not given any direction in regards to the actions.

Dubai, an appealing the travel industry objective, has for quite some time been well known with Russians, who were among the top guests and buyers of land even before the conflict and following authorizations tossed the Russian economy into strife.

Apurv Trivedi of Healy Consultants, which exhorts on setting up organizations, including crypto organizations, said they had certainly been getting additional interest from Russian clients.

"They're essentially attempting to safeguard themselves against the inflationary tensions that are occurring against the Russian cash. So crypto has been a generally excellent exit for them to deal with the dangers that they're confronting," Trivedi said. "It's a decent liquidity supplier for them."

Healy's Sami Fadlallah said a ton of the cash coming from Russia has been moving into Dubai's land, refering to both industry talk and their organization's insight.

"Individuals stopping their cash in many lofts in the Marina, Downtown," Fadlallah said.

"We've seen a ton of Russians supporting their wagers against the depreciation of the rouble by moving a ton of resources into crypto. Also, the UAE is generally free as far as its guideline and specialists over moving crypto here."