The use of Bitcoin for real estate transactions is rising in Dubai, but it takes a complex system of middlemen to seal the deal
Developers in Dubai have included Bitcoin as a payment option for properties. Firas Al Msaddi, the CEO of fam Properties, described the process as similar to using cash or a bank loan to buy a house.
However, using Bitcoin to buy real estate in Dubai isn’t as straightforward as using the local currency. The UAE Central Bank has banned transactions or payments made via virtual currency, and does not provide licenses to any financial institution for processing crypto transactions.
Therefore, a workaround was created by Huobi, a Singaporean crypto exchange in collaboration with fan Properties. Essentially, an investor would sell their crypto to Huobi, who will then convert this and pay fam Properties in dirhams.
Bitcoin still seen as a volatile asset
Experts advise buyers to cover all angles before they decide to go through with a Bitcoin for real estate transaction in Dubai.
Some considerations include:
- Checking if the property is built by a reliable and legitimate firm
- Making sure all the paperwork is complete and transparent
Many think Bitcoin prices could swing in either direction — therefore, it is recommended to purchase properties when Bitcoin prices are on the high side of the trading range, and to transfer it to USD as soon as the transaction is finished.
New challenges for regulators
The “Blockchain and Cryptocurrency Regulation 2020” stated:
“Until the regulatory framework is amended or new regulations are issued to deal with virtual currencies, the regulatory framework remains valid, and technically speaking the UAE Central Bank can take action against existing and proposed business dealing in virtual currencies.”
It appears that by using offshore exchanges, the regulators in Dubai have effectively been cut out of the equation. As long as a market has free flow of fiat currency, it would be fair to speculate that Bitcoin or any other major crypto could be used for real estate purchases.
Other areas for blockchain in real estate
Traditionally, when a transfer of property occurs, middlemen such as brokers, lawyers, notaries, banks, and so on, need to be present. All these professionals cost a lot of money and could be made redundant by blockchain.
If property records were kept on a public blockchain, the need for title agencies would be greatly reduced. While blockchain and cryptos aren’t widely used in real estate, that appears to be changing, at least in some markets.
The payment structure that Huobi has helped to create may find a home in other real estate markets, or in any nation where fiat currency can be moved freely offshore.