Bitcoin as an alternative currency for purchasing real estate

Changes in the digital asset market

In recent years, the digital asset market has undergone significant changes and has become part of the global financial ecosystem. Investing in Bitcoin was once only accessible to experienced traders, but today cryptocurrencies have become interesting and understandable to a wider audience.

Buying real estate with cryptocurrency

For several years now, requests to purchase real estate with cryptocurrency have been coming in from technological centers around the world. Although it is illegal to specify bitcoin or another cryptocurrency as a payment unit in a contract, there are functioning schemes that allow transactions to be conducted through dollars, euros, or other national currencies.

Official property rights registration systems in countries

In some countries, such as Estonia or Georgia, an official digital system for recording property rights through blockchain is being launched. However, most countries do not regulate cryptocurrency transactions when buying or selling real estate. The high volatility of cryptocurrency prices creates risks when entering into contracts.

Investor interest in digital assets and real estate

Investor interest in investing their assets in real estate through the use of digital assets remains strong. This is especially relevant for countries with weak economies or high inflation rates, where the use of Bitcoin can represent a stable form of storing financial assets.

Acceptance of Bitcoin for housing

The visible growth of construction companies accepting payment for housing in bitcoin is contributing to an expanding interest among clients in this method. Consumers are increasingly gaining options to choose their payment methods, reflecting the diversity of new ways to produce and handle digital assets.

Traditional forms of storing financial status

Property remains one of the traditional forms of storing a person's financial status, and various new payment methods provide consumers with the opportunity to choose the most convenient way to make transactions.

Digital financial assets in Russia

Since the beginning of 2021, it has become possible in Russia to legally issue, sell, and buy cryptocurrencies, including Bitcoin, in accordance with the law "On Digital Financial Assets." However, the use of cryptocurrency as a means of payment in the country is prohibited, and this restriction is not unique, as many other countries are also implementing similar bans.

Popular destinations for Russians

The article discusses popular destinations for Russians and residents of the post-Soviet space in the fields of tourism and investment, such as Thailand, Turkey, the UAE, and Cyprus. After several countries closed their doors to Russian capital, these markets have become more attractive to Russian citizens.

Thailand and cryptocurrencies

Thailand has become the first country in Southeast Asia to legalize cryptocurrencies. The regulation of market participants is carried out in accordance with the "Digital Assets Act," adopted in 2018, and is overseen by the Securities and Exchange Commission (SEC). The tourism sector in Thailand also supports the development of cryptocurrencies, attracting investors from around the world.

New restrictions and laws in Thailand

Since April 1, 2022, Thai authorities have banned the use of cryptocurrency as a means of payment, allowing only its use as an investment tool. A law was also passed requiring personal visits to the offices of Thai cryptocurrency exchanges to open a new account. A global trend of tightening regulations on digital assets and increasing government control is being observed in many countries.

Expert opinion and practice of using cryptocurrencies

Experts in the Thai real estate market believe that recent changes in legislation will not affect the payment options between sellers and buyers of apartments, as transactions are still conducted using fiat currency. The use of cryptocurrency for purchasing apartments and villas in Thailand is a common practice, with around 30% of transactions in the local real estate market being conducted using digital currencies.

Buying an apartment with cryptocurrency: new opportunities

In Russia, many developers offer their potential buyers the option to pay for an apartment with cryptocurrency. This is a new and interesting proposal that includes two main transaction schemes. The first scheme assumes that the buyer has cryptocurrency, while the second involves clients who want to make payments in traditional currencies, such as rubles.

The first scheme: payment with cryptocurrency

In the first option, the buyer selects the desired property from the developer, after which the parties discuss the terms, including the choice of cryptocurrency for the transaction. Payments are made in stable cryptocurrencies, such as USDT or USDC, which are pegged to the dollar and characterized by low volatility. After that, the client transfers the amount from their electronic wallet to the developer's wallet, thus completing the transaction. A representative of the developer then transfers the funds from their foreign bank account to the project's account on behalf of the buyer.

The second scheme: payment with regular currencies

In the second option of the deal, clients can transfer rubles from their bank account to the intermediary's account, which is also opened in a Russian bank, if they do not have an account on the exchange or if their funds are insufficient to complete the transaction. Both parties discuss the terms and choose a cryptocurrency exchange that will act as a guarantor for the fulfillment of obligations between the parties. The developer usually bears the exchange fee, which ranges from 5 to 10%, offering a discount to the buyer.

Payment in the secondary market

Payment in cryptocurrency on the secondary market is also possible, but less common. An agent from the agency can act as an intermediary, accepting cryptocurrency from the client into their crypto wallet on the exchange, converting it into regular money, and then transferring it to a bank account for further payment to the property seller. This method of purchasing an apartment with cryptocurrency can be convenient and straightforward for both parties.

It is important to remember that the cryptocurrency market is relatively new and still largely uncharted, which brings certain risks and challenges. In light of this, it is crucial to be careful when choosing a reliable developer and cryptocurrency exchange for conducting transactions.

In Turkey, as in Thailand, a law has been enacted prohibiting the circulation of cryptocurrencies within the country. However, it is still possible to purchase real estate with digital coins by signing a contract in lira or euros. Agencies or developers facilitate the intermediate exchange of virtual assets for real ones. The conversion of cryptocurrency to fiat money is carried out at the expense of the seller or intermediary, with a commission of 1.5-2%.

Additionally, the exchange employs a mechanism to protect client interests, which requires the exchange to provide a bank check for cryptocurrency payment before executing a transaction. This simplifies the registration process by not requiring proof of the source of funds when purchasing property under leasehold conditions.

Transactions using cryptocurrency for purchasing real estate from legal entities are considered reliable. In the case of acquiring property from private individuals or developers who prefer traditional payment methods, there is always the option to convert digital assets into euros, dollars, or the national currency through an exchange office.

It is important to note that the purchase/sale of cryptocurrency is only possible with the official currency accepted in the country.

Purchasing real estate in the Middle East using cryptocurrency

Real estate buyers in Middle Eastern countries can use cryptocurrency for transactions. They can withdraw cryptocurrency to their personal bank accounts in Turkey, which attracts foreign investors due to valuable assets.

Alternative methods of calculation

In addition, buyers have the option to contact intermediaries at exchange offices in Moscow, St. Petersburg, and Kyiv. Here, a money transfer service is offered from one city to another, for example, from Moscow to Antalya. Transactions are carried out using a code that allows cash to be received within a few hours.

Calculations in the national currency

In Russia, transactions are assigned a code, and clients receive the agreed amount minus the commission. The commission rate can range from 1% to 7%, with the commission decreasing as the transaction amount increases.

The use of cryptocurrency by developers

Many Turkish developers have already set up their crypto wallets and are offering buyers the option to pay for real estate through digital currencies.

Currently, digital currencies are in Cyprus.

They are not widely popular and are not recognized by the Central Bank as a legal payment instrument. This makes their use in the primary market difficult, as developers are reluctant to implement cryptocurrencies due to the challenges of converting them into traditional currencies.

In the secondary market

Although it's not common, there can be situations where transactions are conducted using cryptocurrencies. If a buyer prefers this form of payment, professional agencies can offer to purchase digital assets on licensed platforms abroad, but only after a thorough verification of the legality of these funds.

To protect all parties involved in the transaction

Procedures are applied.KYCKnow your clientdue diligenceA thorough check is conducted, during which a package of documents confirming the purchase and payment is collected. Payment through cryptocurrency can be attractive due to the absence of bank control.

However, it is important to consider the potential risks.

Related to the verification of the source of funds and ownership rights to the property. It is important to remember the state regulation of banking operations, which can vary from country to country.

Making the decision to be ready to take on these risks

It depends on the available options. The most important factor is choosing a reliable partner who can ensure the transparency and security of the transaction.

Bitcoin is turning into an apartment or a house.

In recent years, the digital asset market has transformed into a global ecosystem and has become part of the world’s financial system. While cryptocurrency transactions used to be the domain of risk-takers and the tech-savvy, today the technology is spreading and becoming interesting and acceptable to a broader audience.

Payment for real estate through digital assets

Requests for purchasing real estate with cryptocurrency have been coming to realtors and developers in the world's tech hubs for several years now. Let’s clarify right away – specifying bitcoin (or another cryptocurrency) as the payment currency in a sales contract or investment agreement is still illegal in any country. However, in several states, there are functioning schemes where de jure, transactions are conducted in dollars, euros, or national currencies, while de facto, the transactions are carried out using crypto money.

The popularity of cryptocurrency as a payment method for real estate

Cryptocurrency exchange players are looking to diversify their portfolios and move part of their capital into real assets, such as square meters, and they prefer to use the currency in which their funds are held.

Since March 2022, Russian citizens have frequently turned to purchasing real estate using cryptocurrency, as due to sanctions and reciprocal restrictions from Russia, it has become difficult to settle payments with apartment sellers.

Calculations through digital assets as an alternative

In such circumstances, transactions through digital assets are one of the few available alternatives. In the territory of the Russian Federation, the purchase of cryptocurrency is completely legal.

In some countries, transactions between developers and clients through cryptocurrency are common practice, while in others, such deals are not widespread or are rare. We examined several areas that are popular among Russians and residents of the post-Soviet space, both for tourism and investment purposes.

Avoiding restrictions on transferring capital abroad

It is worth noting that the relevance of these markets for Russian citizens has increased after the effective closure of several countries to Russian capital. In such circumstances, transactions for real estate through digital assets have become a necessary option.

Examples of countries where payment for real estate through cryptocurrency is common.

• Thailand
• Thailand was the first in Southeast Asia to legalize cryptocurrencies. The activities of all market participants are regulated by the "Digital Assets Act," which was adopted in 2018. At that time, a regulatory body was also established – the Securities and Exchange Commission (SEC).
• Since April 1, 2022, Thai authorities have enacted a law prohibiting the use of cryptocurrencies as a means of payment within the country. They are only allowed to be used as an investment tool.
• Turkey
• In Turkey, cryptocurrencies are relevant not only to the housing market but also to many other sectors. For example, the country has active crypto banks – financial institutions that operate on blockchain technology. Additionally, cryptocurrencies are popular in Turkey as an alternative asset in the context of high inflation.
• UAE
• In the UAE, cryptocurrencies are also used as an alternative asset and a means of payment for real estate. However, the overall procedure for conducting transactions is regulated by federal law, which leaves the decision to use them as a payment method to the discretion of the parties involved.
• Cyprus
• In Cyprus, acquiring cryptocurrency is not particularly difficult, and paying for housing with digital assets is a common practice. However, recently there has been discussion in the country about introducing banking secrecy for cryptocurrency transactions.

Conclusion

Withdrawal operations with cryptocurrency have become more accessible to a wider audience, as requests for purchasing real estate with cryptocurrency are coming to realtors and developers in technological centers around the world. There are strategies that allow clients to make transactions through digital assets, despite bans in some countries. For example, in Russia, acquiring cryptocurrency is completely legal. In this article, we explored several areas that are popular among Russians and residents of the post-Soviet space, and we touched upon the issue of organizing payments through digital assets in certain countries.