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How Far Are We From Crypto Mortgages? Crypto, Blockchain, and The Future of the Industry

With cryptocurrency gaining traction in sectors across the world, many are wondering, “When can I start paying my mortgage with crypto?” The answer: not anytime soon. At least, not here in The States. Although 46 million Americans own Bitcoin (adding up to 22% of all adults) — investors and Dogecoin collectors alike have expressed their concerns regarding the custody, volatility, and security of these digital assets.

(Image from pwc.com

 

With our newfound love of decentralized currency, however, it does seem to be a matter of when —not if — cryptocurrency mortgages become a reality. Countries like Spain & Canada are among the few already considering the incorporation of crypto into everyday finances (including mortgage & loan payments).

That begs the question: How far ARE we from crypto mortgages?

Spain & The Digital Transformation Law

This summer, cryptocurrency edged its way into the mortgage industry. Spain’s leading opposition party (Partido Popular) introduced a bill that would allow for mortgages to be paid with cryptocurrencies & create a national crypto assets council to oversee it all. The council would evaluate the use of any crypto and blockchain tech in the real estate sector.

Additionally, the draft bill allows Spanish banks to deploy blockchain technology to manage mortgage & insurance — automating the whole process through smart contracts.  The same technology behind cryptocurrencies (like bitcoin), blockchain creates a secure & unalterable record of transactions. This is how some gambling sites, for example, allow players and operators to transfer funds directly to each other. No expensive third-parties involved in verifying interference. No regulatory restrictions. Just a protected database structure secured by raw hashing power.

(Image from pwc.com)

The biggest takeaway from this new proposed bill, however, is the newly formed council. Aptly named the National Crypto Asset Council. This group of crypto caped crusaders is formed directly from the Directorate General of the Treasury, the National Securities Market Commission and the Bank of Spain. The CNC will act as an advisor to the public and (more importantly) study/analyze the performance of crypto assets within the blockchain. Additionally, they’ll ensure there’s no funny business with fraud and tax evasion.

“…in order for the law to be implemented, a change of legal category for cryptocurrencies would have to be made: from the current “means of exchange” status to “means of payment.”

      -        Cristina Carrascosa, Lawyer, CEO of ATH21

Crypto Mortgage on the Horizon?

Natalia Karayaneva, CEO of Propy — a platform powered by blockchain technology — recently shared with Cointelegraph that crypto payment for real estate isn’t a revolutionary development. Back in 2014, Bitpay helped move the sale of a Lake Tahoe property that sold for $1.6 million in Bitcoin.

Karayaneva believes blockchain is where it’s at — leveraging the technology to facilitate crypto-to-crypto transactions within the real estate space.

“It is possible to close a real estate transaction entirely in BTC, without any cash conversion involved.”

-        Natalia Karayaneva, CEO of Propy

Although using blockchain does seem like a viable option — it should be noted, the real estate transaction does not go through the normal escrow process. The workaround of using smart contracts to let users create, audit, and authenticate documents from anywhere — though seemingly buttery smooth — may encounter more problems than going the traditional route. Once you factor in regulators and the laws of your respective state, it becomes a clunky process.

While it’s too soon to tell if blockchain technology will be the vehicle that propels the real estate industry forward. No doubt, crypto investors will continue to purchase properties with their digital assets. However, will it become the norm for citizens to pay off their dream home with some Ethereum?

Only time will tell.

 

As we follow more international trends on cryptocurrency in the mortgage industry, Fairway Wholesale Lending will continue to keep you updated. Stay tuned!


  • Published By: Jordan Morales
  • Date Published: October 19, 2021

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