If there’s one lesson we can learn from Russian billionaires, it’s that there’s always a new place to shelter from winter.
In the past ten days, wealthy individuals with Russian origins have moved billions of dollars worth of Bitcoin to the United Arab Emirates (UAE) in search of a safe haven, an executive at a UAE-based cryptocurrency firm has said.
According to the executive, he has received numerous calls from Swiss brokers asking them to liquidate billions in bitcoin because their clients are worried that Switzerland will freeze their assets. “We’ve never had so much interest,” the executive said, adding that his company typically receives one inquiry for one large transaction a month.
According to the current legislation in Russia, cryptocurrencies can only be transferred abroad if they are subsequently converted into fiat currencies, such as the dollar or the euro. Due to these restrictions, many Russians have wanted to move their funds out of the country.
“Russian clients are interested in moving their crypto-asset funds out of Russia and keeping them safe from any legal claims and bureaucratic hassles in Russia,” said Dmitry Lazarichev, co-founder of Wirex Limited and Crypterium, two London-based blockchain-based firms, and Singapore, respectively.
Also real estate
However, not all Russian clients want to sell their cryptocurrencies. Some want to invest in real estate in Dubai, while others want to use the services of UAE companies to convert their digital fortune.
But what is clear is that there is no shortage of business. According to the report, none of the clients have ordered less than $2 billion, and that is but a drop in the bucket compared to the digital money the Russians have amassed through illegal means such as cybercrime and tax evasion.
Russian customers are reportedly so eager to exchange their cryptocurrency for fiat that they are willing to pay an absurd premium to do so.
Since before the invasion of Ukraine, Dubai has been a popular destination for ultra-rich Russians, as well as a desirable location for land investors.
The United Arab Emirates (UAE) has followed suit by implementing favorable regulations for the cryptocurrency and blockchain industries, making it an attractive destination for the sector.
This is not new; The UAE was one of the first countries to consider the potential of blockchain technology in 2017 when it announced plans to create a “city of the future” that would be entirely paperless and – mind you – blockchain-powered.
However, in light of the recent tensions between Russia and Ukraine, this has become a political issue. The UAE, which is not involved in the conflict between the two countries, has taken advantage of this situation and is starting to attract Russian investors.
The UAE has taken a number of steps to make the country more attractive to investors. Last year, it introduced regulations allowing businesses to accept cryptocurrencies as a form of payment; more recently, it announced plans to establish a regulatory framework that would allow banks and other financial institutions to work with cryptocurrencies.
Other experts doubt
But other experts question whether Russia can really use cryptocurrencies to evade sanctions. Some of those experts include Salman Banei, head of public policy at blockchain analytics firm Chainalysis, and Jake Chervinsky, head of policy at the Blockchain Association of America.
Banei told Coindesk that it was “unlikely” that Russian agents would be able to use digital assets like Bitcoin to avoid sanctions.
“The scale and scope of Russian financial activity are such that there are many avenues through which they can move funds,” he wrote. “Some may involve cryptocurrency, but most do not.”
Chervinsky echoed Banei’s view in a tweet on Friday: “I don’t think Bitcoin can be used to evade sanctions,” he wrote. “Bitcoin is not anonymous, so if someone is caught using it to break the law, they will be punished.”
© 2024 Cryptopress. For informational purposes only, not offered as advice of any kind.
