Buying and Selling Property With Bitcoin

8 January, 2019

Buying and selling property using cryptocurrency is less straightforward than was first assumed. The handful of mortgage lenders and realtors who were initially keen are now reluctant to accept crypto deposits due to money laundering fears. Until there is greater clarity concerning crypto regulation, due diligence procedures and taxation, potential participants are opting to wait on the sidelines.

Uncertain Macroeconomic and Political Backdrop to 2019


[Buying and Selling Property With Bitcoin Is More Complex Than It May Seem] The year ahead promises an uncertain macroeconomic and political road for the real estate sector. In its 2019 outlook, the Urban Land Institute points to a complex, multi-layered series of overlapping trends with unpredictable results expected this year. The same can be said of projected cryptocurrency prices as the bear market continues. 

Natalia Karayaneva, CEO of real estate startup Propy, highlights a number of issues which need to be addressed when buying and selling property using crypto. “The main issue we’ve experienced is exchanging large amounts because sellers, very often, want to to get paid in fiat,” she explains. “When payment is crypto to crypto, large amounts have to be sent in smaller portions as transactions are not reversible. This is because sending large amounts of crypto is still a risky process e.g. if a hacker swaps a public address, the transaction is not reversible,” noted Karayaneva.

Using Crypto Does Not Eliminate Tax Liabilities


[Buying and Selling Property With Bitcoin Is More Complex Than It May Seem] Karayaneva explained that Propy also educates various title or escrow companies on processing such deals as a majority of them do not want to touch crypto. A title company is one which issues title insurance policies, while an escrow agency attends to the many details involved in opening, maintaining, and closing a real estate sale transaction.

“Additionally, when you buy real estate using cryptocurrency it’s a taxable event, unlike the myth amongst some investors that using bitcoin will eliminate taxes – not true,” stressed Karayaneva. 

The primary challenge her group has faced is educating all participants involved in a deal, including agents and title agents, to properly prepare legal documents for U.S. and EU deals. So far Propy has facilitated deals in the US, EU, and Ukraine, with payment in ETH-ETH, BTC-BTC, BTC-fiat, and fiat-fiat.

Trust Issues


Andre Bruckmann is the CEO and founder of Mycro.Jobs and owns real estate on the German island of Rügen. He considered accepting payments in crypto, explaining:

I received a request from somebody who wanted to rent the house for the Christmas [season] directly from me and wanted to pay with bitcoin. Although I love cryptocurrency, I was unsure with the request, as I did not know the person. Since trust here was more important than profit I refused at that time. If I had any way of checking the trustworthiness of the person, I would have made the deal.

Volatility and Due Diligence


There are still many factors hindering the renting or buying of real estate properties directly using crypto. Stefan Neagu, co-founder of digital identify management system Persona, said: “The first aspect is the volatility of the market. In order to not be affected by the volatility, the price would need to be set or agreed in USD or EUR, but payable in crypto.”

He identified another issue in that the person who receives the crypto as payment may have a hard time declaring those amounts to government fiscal agencies. ”Both aspects have a common factor however – the source of funds. Renting/buying properties with crypto would be the choice (I assume) of money launderers using funds from illegal activities, due to the lack of possibilities to prove the source of funds,” added Neagu.

KYC and AML


Neagu explained that it is likely the majority of the people who would want to rent or buy real estate properties would not insist on paying with crypto. 

Even if they choose to purchase properties with crypto, they would have to undergo the necessary KYC/AML in order to be able to move large amounts of money from cryptocurrency to EUR or USD.

Neagu noted: “With the right tools or applications, the owner could be in the position to check the source of funds, but even so, there are a lot of extra steps required to access crypto. I assume there are not that many people [real estate owners] that want to go an extra mile just to accept crypto as means of payment.” 


Source link   Crypto currency: Bitcoin


Blockchain Life 2019

On April 23-24 world blockchain and cryptocurrency industry meet at a 3d global forum - Blockchain Life 2019 in Singapore. More than 5000 participants from 70 countries are going to visit the biggest...

Will Crypto Exchanges be Able to Survive

Only the fittest will survive, or so the saying goes. This mantra does not only apply to the animal kingdom, it works in the business world also and surviving is what a lot of...

Why Crypto currencies Will Rise Again

The cryptocurrency market has undergone a great deal of turmoil over the past year or so. The idea of a cryptographically secure decentralized ledger laid the foundation for the...

Crypto VC firm seeking $60M amid bitcoin rout

It goes without saying that 2018 bear season savaged the broader crypto industry. Investors lost faith, Wall Street seemingly pulled out and entire startups...


Could Bitcoin Initiate a New Bull Cycle by 2019?

In the last 24 hours, the cryptocurrency market recovered by $4 billion as the Bitcoin price rebounded above $3,700. Several major crypto assets in the likes of Ethereum...

2019 a Year of Accumulation For Bitcoin

In the past 24 hours, the crypto market has recovered from $120 to $123 billion as the Bitcoin priceavoided a further drop below the $3,600 mark. The bitcoin price...

Bitcoin Exposed, ETF Hopes Dimming?

In the short-term, sellers seem to be in charge and yesterday's drop below our immediate support at $3,700 may lead to reductions towards $3,400 may lead to...

Why cryptomarket remains bearish in 2019

With the exception of Ethereum, which seems to have started the year with all guns blazing ahead of the Constantinople fork, it won't surprise anyone that the market analysts SFOX rate...