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More Luxury Agents Should Understand Cryptocurrency

Many nuevo-rich buyers made money working with Bitcoin or other cryptocurrency, and they’ve shown a strong fondness for investing profits in real estate.

NEW YORK – Newly made cryptocurrency millionaires and billionaires are showing a love for real estate, flooding the luxury market and driving some of the most expensive transactions over the past year.

Among notable recent blockbuster real estate deals, Brian Armstrong, the CEO of Coinbase, a U.S.-based cryptocurrency exchange, purchased a $133 million estate in Bel Air, Calif.; Ivan Soto-Wright, co-founder and CEO of Moonpay, a cryptocurrency payments infrastructure provider, purchased a waterfront Miami estate for about $38 million; and Olaf Carlson-Wee, CEO of Polychain Capital, a cryptocurrency-focused investment fund, purchased a mansion in Hollywood Hills for $28.5 million, The Wall Street Journal reports.

To expand the appeal of real estate within this group, developers are rushing to accept cryptocurrency payments for their high-end listings, and brokerages host cryptocurrency seminars to help agents draw in this group of investors.

For cryptocurrency owners, “It’s gotten to the point now where it’s like, ‘OK, so what do I do with all this?’” says Alex Sapir, a Miami developer. Sapir sold a $22.5 million apartment purchased with cryptocurrency last year. “You’re getting them in the early onset stages of their investment career.”

However, only a handful of luxury real estate transactions have been completed using cryptocurrency so far. In most cases, sellers transfer the cryptocurrency to U.S. dollars to close on the transaction. But some developers push for greater use in real estate, and PMG reportedly become the first real estate developer to accept pre-construction condo deposits in cryptocurrency.

Avi Dabir, vice president of business development at FTX US, says he believes cryptocurrency transactions will grow in real estate because they can be completed more efficiently than traditional transactions – and they aren’t at the mercy of delays that can occur when using a traditional banking system.

“If I want to send a wire transfer today using my traditional bank account, it’s got to be banking hours, I need to make sure I hit that wire cutoff time, and I can’t do it on the weekend,” he told The Wall Street Journal. “That’s not a problem with cryptocurrency. It’s open 24/7.”

Cryptocurrency value can be very volatile, however. Bitcoin traded for $68,990.90 in November 2021, a record high. As of Jan. 26, it was trading for about half that, at $38,000.

Source: “Crypto Kings Are the Real Estate Industry’s Newest Whales,” The Wall Street Journal (Jan. 27, 2022) [Log-in required.]

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