Russian's Workaround for Sanctions - United Arab Emirates (UAE) - News Brief

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The UAE has previously claimed it is not siding with either Western allies or Moscow. UAE presidential adviser Anwar Gargash late last month said the Gulf state “believes that taking sides would only lead to more violence,” and that the UAE’s focus was to “encourage all parties to resort to diplomatic action.”

[Shumba, C. Russians Looking to the UAE to Unload Billions in Crypto Assets: Report. (Accessed March 13, 2022)].

Dubai is quickly becoming the crypto hub of the Gulf region and for a long time has been a draw for the world's rich. So, this refusal of the UAE to take sides with either the West or Moscow has sent a signal out that Russian money will be safe in the UAE.

Therefore, as a result of the sanctions imposed on Russian assets due to the Ukrainian aggressions, wealthy Russians are turning to the UAE for relief. UAE based Cryptocurrency businesses are being deluged by Russian client requests to liquidate billions of dollars of digital assets [See, Saba, Y., Barrington, L., Alkousaa, R. and Cornwell. A. EXCLUSIVE Russians liquidating crypto in the UAE as they seek safe havens. (Accessed March 13, 2022).

Some Russians (and Belarusians) are seeking to use their cryptocurrency to either purchase property in the UAE, or, alternatively, convert it to hard currency to be stashed elsewhere.

Reuters reports that one UAE based Crypto firm has received numerous inquiries in the past 10 days or so to liquidate billions in value of Bitcoin. These inquiries have come from Swiss brokers stating their clients are fearful their assets in Switzerland will be frozen by virtue of sanctions. It was noted that none of these inquiries were for less than $2 billion.

According to Swiss officials, cryptocurrency is subject to the same sanctions the country has placed on 'normal' Russian assets. As such, if a person in Switzerland is sanctioned, their digital assets are frozen.

Nonetheless:

Bitcoin veterans, having seen these sorts of reports more than once, are taking the Reuters story with a big grain of salt. “Calling a hard fake news on this one,” tweeted Blockstream’s Adam Back. Coinshares’ Meltom Demirors said: “This kinda feels like the 2018-2019 deluge of emails to [over-the-counter] desks about whales wanting to sell 10-100k slugs of BTC … Will believe it when the ticket gets printed. Until then, FUD.”

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Furthermore, experts claim that the transparency of crypto transactions (as they are recorded on the blockchain) renders a large scale evasion of sanctions using digital assets onerous. While calling for vigilance from cryptocurrency firms, the US Treasury noted that evading sanctions by using crypto was not practicable.

Reuters has noted that UAE companies have expressed reputational concerns on the continuation of doing business with the Russians under the circumstances. However, these businesses believed that the UAE's abstention on the resolution condemning Russia for its invasion of Ukraine by the UN Security Council was a signal to them not to impose restrictions on Russians.

The UAE, which has continuously expanded its ties with Russia, has not imposed the sanctions against Russians as has been done by the West, nor has their Central Bank issued any guidance regarding business matters with Russians.

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