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While the world is focused on Russia and its invasion of Ukraine a ton of people have been also concerned about the sanctions and ways to possibly beat them. Though the US government has come out and stated that crypto is impractical for sanction busting fears continue to resonate with people. Adoption of crypto has been really big in countries that have already sanctioned Russia reducing the ability to really beat sanctions in any meaningful way. One country though has become an increasingly large hotspot for Russian crypto to head.
Prior to the invasion, Ukraine was aiming to become a crypto hub and the capital of crypto for Europe however this has been thrown into disarray due to the Russian invasion. With sanctions coming down on the Russian rich and their companies fire sales have popped up across the globe as Russians try to accumulate dollars as quickly as possible. The country that has "benefited" from this is the United Arab Emirates. Recently been hit with a ton of requests to liquidate billions in cryptocurrency. This might sound bad at face value since one firm stated that they have had 5 or 6 requests and none of them were for less than $2 billion but it is highly unlikely to be the case.
The reason for this is pretty simple. Russia is the number three Bitcoin miner in the world meaning they are mining and have mined a ton of Bitcoin over the years. With the Russian economy in freefall keeping their crypto in Russia is increasingly a poor idea. Rather than sit on an asset that the Russian government could attempt to prevent from leaving the country these companies are looking to do something with it.
The UAE has so far refused to take sides in the conflict creating an opportunity for those with vast amounts of crypto to put it to work. One of these ways is that real estate in Dubai which has long been a magnet for the world's ultra-rich. Some might see this as concerning but it is important to remember that companies like Chainalysis exist and have launched sanction screening tools for the ecosystem. Recently it has come out that miners are currently holding less Bitcoin than they had been furthering the idea that this could be these businesses selling off some of their holdings.
Another thing is that the UAE in being neutral will not want to overextend itself to the Russian side as they could then face the wrath of the West. Russia is not going to be exporting much military equipment anytime soon so the UAE which is bogged down in Yemen will be reliant on the West for state-of-the-art military equipment. To prevent running afoul with the West it is pretty easy to imagine that the UAE and their businesses involved with these transitions are investigating them more thoroughly than typical to make sure that someone else is not named as the owner of the wallet when an Oligarch under sanctions is.
As they try to stay a neutral party one thing the UAE is not going to do is shoot itself in the foot. Being that it is part of OPEC and produces a ton of LNG it stands to benefit from selling to Europe. With the warmer months approaching though their opportunity is shrinking to really benefit and create massive inroads for a market that will be here long term. Russia's whole economy is collapsing so it would not make any sense to shun the very wealthy West for a country that could end up in ruins or even has domestic issues if the war continues to kill as many Russian soldiers as it has.
If they play their cards correctly the UAE stands to launch itself into becoming one of the crypto hubs of the world. This will encourage further investment into technology and divestment from oil and other fossil fuel revenue they currently rely on. By being a hub it will help ensure long-term economic gains as Web 3 and the Metaverse become huge economic drivers and benefit from the development of these platforms.
Please know I am not a financial advisor I am just someone who picked up on a trend and wanted to express it! Makes sure you always do your own research and never invest money you cannot afford to lose! If you enjoyed this article and would like to further support me below are a couple of referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_
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