Why Buying, Renting and Selling Real Estate Land with Cryptocurrencies Has Room for Improvement
The ease of using digital assets to make land purchase payments has turned out to be more complex than the crypto stake holders expected. Most realtors and mortgage sellers have taken a keen approach with accepting digital currencies compared to their earlier stance. This is mainly because of the uncertainty within the regulation and inadequate market due diligence procedures to eliminate money laundering proceeds.
The Uncertainty In 2019 CryptoEconomics
With just a week into 2019, crypto markets are showing probable signs of an improvement. This might mean new support levels for altcoin prices as we dive deeper into the year or a continued bear run if the uptrend is not sustained. Land price trends on the other hand remain dependable on a couple macroeconomic factors to react. It is clear that both assets 2019 trajectories remain uncertain given that crypto has a history of high volatility.
According to Propy CEO, Natalia Karayaneva, the main reason why realtors are shying away from crypto payments is the already existing familiarity with fiat that most people prefer to date. The CEO further explained that large crypto transactions are exposed to a hacking which might cost businesses a fortune. She added that one would have to send the amount in small portions to mitigate this risk; an avenue that stake holders are yet to buy the idea.
Crypto’s Tax Evasion Myth
Propy is involved in enlightening realtors and prospective clients on how to go about crypto-oriented deals within real estate. Karayaneva said that the company’s target market includes title & escrow companies. The two types of companies are tasked with issuing title insurance policy & overseeing transactions within real estate respectively. She went on to strongly note that;
“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,”
So far, Propy has been involved in a couple real estate deals that have been crypto backed. However, the company’s main hurdle is guiding its stake holders on how to meet the legal preparations in the EU & US. This has not stopped the firm from overseeing Bitcoin & Ethereum transactions against fiat in other regions like Ukraine.
Crypto’s Trust Related Inefficiency
A good number of deals have been left on the table owing to the cryptocurrency trust issue whereby background checks are almost impossible. Recently, Mycro.Jobs founder, Bruckmann Andre had an offer for a guest who wanted to rent one of his properties over Christmas and pay in crypto. The deal however did not go through since Bruckmann was sceptical about the specifics of the interested client. In his opinion, the situation would have been way different if there was means to check on the client’s legitimacy.
The Volatile Crypto Market
Other stakeholders within the Fin Tech arena that have commented on why real estate won’t pick up crypto sooner include Stefan Neagu. The co-founder of digital identity management system supported this view with the point of a volatile market which in history has not been investor’s favourite. This simply means that the most likely solution was an introduction of stable coins backed with major currencies.
The other factor that Stefan pointed out with lack of an efficient due diligence procedure or environment within crypto markets. He argues that the sources of funds placed in digital assets may be problem when it comes to declaration of these proceedings to the regulators. Therefore, this puts off many interested crypto market participants, a trend that is likely to continue until clear regulations are established.
Know Your Customer (KYC) & AML Practices In Crypto
Based on the current statistics, Neagu’s opinion was that most prospective real estate buyers & renters are unlikely to settle for crypto transactions. In as much as it is possible, involved parties have to pass the required KYC/AML procedures and requirements for such transactions to go through. Neagu summarized his sentiments towards this issue with a few insights;
“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.”