Bitcoin fever hits US real estate market

This article is more than 12 months old

MIAMI Bitcoin fever has hit the US real estate market, especially in Florida, offering foreign investors a way to dodge currency controls at home and US economic sanctions.

As of the end of last year, the digital currency was listed as a way to pay for some 75 properties for sale, especially in south Florida and California, according to the real estate firm Redfin.

Some are even saying they will take only bitcoin, including one who is selling his half-million-dollar downtown Miami condo unit.

Bitcoin has been on a roller-coaster ride of late, shooting up to nearly US$20,000 a piece in mid-December and then dropping sharply around Christmas. It started the year at around US$14,000.

Its use in real estate transactions is novel, and agents are wary because of its high volatility.

"I'd be blown away if a year from now we see hundreds of real estate transactions in bitcoins," said Mr Jay Parker, Florida CEO for the Douglas Elliman brokerage agency.

Still, such transactions can be useful for foreigners who want to invest in the US and cannot otherwise do so, said economist and bitcoin expert Charles Evans of Barry University.

"This seems to be driven by international investors who are circumventing inefficient banking and currency controls at home, and by US cryptocurrency enthusiasts," Dr Evans said.

"The governments in those countries restrict the amount of money that their residents are allowed to transfer abroad through the banking system. Bitcoin enables individuals there to bypass such restrictions," he added.


This could be a draw for investors, who even before the bitcoin rage were already hot on the real estate market in south Florida.

Nearly half of all foreign buyers of property in south Florida are from Latin America.Bitcoin offers another advantage for some foreign investors: it lets them dodge US economic sanctions.

Dr Evans cited the example of Venezuela, which imposes strict currency controls and is enduring runaway inflation that surpassed 2,600 per cent last year.

Many senior officials in the government of Venezuela's President Nicolas Maduro have also been hit by sanctions imposed by Washington, which considers his administration a dictatorship.

Similarly, Dr Evans said there is a lot of interest in bitcoin among Iranians, whom he described as "doubly hit" with restrictions in Iran and international sanctions.

It is an open secret that money laundering fuels the real estate market in south Florida.

But instead of hiding the practice, bitcoin could have the opposite effect.

The crypto currency "is a terrible medium for large-scale money laundering, because all bitcoin transactions are recorded in the publicly available transaction record known as the blockchain", said Dr Evans.

Although bitcoin has been associated with the drug trade and cyber attacks, blockchain "leaves a lot of fingerprints," former Florida representative Jose Felix Diaz told Politico.

Last year, Mr Diaz sponsored a bill, that is now law, including bitcoin in Florida's laws for fighting money laundering.

Mr Parker also said money laundering via bitcoin is far from posing a risk because "the beneficial owners of the real estate are always going to be able to be traced". - AFP