Interest in buying real estate for cryptocurrency grows with every rise and fall of bitcoin.
As soon as digital money begins another impressive growth, skeptics predict an imminent collapse, and more judicious and savvy token holders are looking for where to invest them. At all times, real estate has been one of the main instruments for preserving capital. Therefore, many crypto businessmen choose this sector as an 'alternate airfield'.
History of cryptocurrency real estate transactions
The cryptocurrency boom is in full swing. After the price for 1 bitcoin came close to the $20,000 in December 2017, the whole world started talking about bitcoin in particular and cryptocurrencies in general. The boom of ICOs (initial coin offering) in 2018, which allows companies to raise funding while avoiding the complexities of the traditional IPO procedure, also contributed to the spread of information about cryptocurrencies and related opportunities. Everything related to cryptocurrencies is developing rapidly. Real estate transactions have not become mainstream here, but now this market is also growing rapidly.
Let's go back to 2013. One Canadian put up a small house with a small plot of land for sale. The price was in bitcoins. According to the owner of the real estate, which looks more like an old barn than a place where you can live, he needed digital money for the development of Internet projects. This was the beginning.
By 2015, the number of such transactions had increased so much that large real estate agencies were interested in them.
In 2017, a British development company sold 50 apartments in a high-rise Aston Plaza and Residences in Dubai for cryptocurrency, thus becoming the first major company to accept Bitcoin as payment.
One-bedroom apartments could be bought for 54 bitcoins ($250,000 at that exchange rate), twobedrom - for 80 bitcoins ($ 380,000). Transactions were processed on the BitPay bitcoin payment platform, which provides tools for financial transactions for corporations such as Microsoft and Virgin Galactic.
Since 2018, another largest property developer in Ireland has started accepting bitcoins for the sale of its properties.
What is the advantage of transactions in cryptocurrency
By not converting bitcoin into regular money, the buyer can save a lot, and the seller immediately receives a demanded electronic asset. There is also a chance that the seller will reduce the price, since Bitcoin is in demand and is constantly growing.
The transaction takes just a few minutes. Moreover, it is absolutely transparent. Sellers and buyers can check and document information at any time, bypassing banks and lawyers, which saves money and guarantees the further purity of the transaction.
The use of blockchain technologies prevents fraud thanks to a unique digital identification system, which is a reliable means of confirming identity and availability of funds.
Cherry on the cake - you save on taxes, as in the EU, transactions with cryptocurrency are considered free of VAT. At the same time, taxes are not levied on either individuals or legal entities.
For cryptocurrency holders, this is a great way to get away from Bitcoin's volatility. Cryptocurrency is unstable. Until the token bought yesterday will fall or fly up by morning, no one can. Apartment prices do not show such frantic growth. However, real estate bubbles rarely burst. It is unbelievable that the purchased villa would be worthless. In addition, the owner can receive income from renting out the living space. Real estate ownership is an important key to obtaining citizenship.
In addition, a huge advantage is the fact that the paperwork is reduced to zero, and the tax authorities cannot trace the transaction, which preserves the confidentiality of the parties. It is also worth considering the lower transaction fees compared to the bank.
Are there any downsides?
The general rules of the game have not yet been formed, so the legal regime for its use varies from country to country. Now, bitcoin transactions and physical assets account for a small percentage of the total. Real estate purchases for bitcoins are allowed in those countries where cryptocurrency is considered legal, or where restrictions on its use do not apply to individuals.
However, Cyprus has long been a center of attraction for various companies working with financial instruments.
Many financial companies have moved their headquarters to the island long ago. This is due to the preferential taxation system. Cyprus is exempt from taxation income derived from securities, with the exception of securities that are derivatives from foreign currencies. In this regard, many crypto projects are also considering Cyprus as a jurisdiction to set up their companies. So the climate in Cyprus is quite friendly to cryptocurrency transactions.
In fact, all regulation of cryptocurrencies in Cyprus comes down to Circular C.268 of the Cyprus Securities Commission (CySEC), according to which it was recognized that cryptocurrency derivatives can be considered as financial instruments, which allows their legal use and provision to users by Cypriot investment companies.
The Circular also imposes additional requirements on investment companies (often created in the form of CIF - Cyprus Investment Firm) if such firms want to deal with cryptocurrencies and offer their users appropriate products.
Investment companies must obtain additional permission from CySec to work with cryptocurrencies, in addition to the existing license.
Apart from the aforementioned CySec circular, there is no regulation of activities related to cryptocurrencies in Cyprus. On the island, it is not prohibited, but also not regulated in any way, ICO activities, mining, ownership and transfer of cryptocurrencies, exchange for fiat (traditional currencies) are not prohibited.
On December 13, the Cyprus Ministry of Finance released a National Money Laundering Risk Assessment of Virtual Assets and Virtual Asset Service Providers (VASPs), highlighting the need to “accelerate the capacity building of the crypto industry”.
How to buy property with cryptocurrency in Cyprus?
Transactions are made on specialized Internet sites, and in addition, some developers offer to purchase square meters for bitcoins. The global trend for cryptocurrency is only developing, so the number of home sellers who are ready to accept digital money for payment is increasing. In addition, you can organize the conversion of cryptocurrency into fiat money for merchants who would like to receive payment in the usual way.
The purchase and sale of real estate is carried out as a standard transaction and schematically looks like this:
- The seller collects the papers required for the sale.
- An agreement is concluded between the buyer and the seller, where the seller's account on the crypto exchange is indicated.
- The buyer transfers bitcoins through a system of smart contracts, which operate on a legal level in the EU.
- The seller receives a confirmation receipt.
- The deal is fixed.
- The record of the change of owner is entered into the register of real estate.
In recent years, a lot has been done in Cyprus to make the investment climate as friendly as possible for IT-technologies and specialists from this most rapidly developing field.
Blockchain and cryptocurrencies are also considered among the most promising areas. The tax burden on IT companies is reduced, the visa regime is simplified to attract foreign specialists from these areas.
In particular, in November 2021, the Cypriot government presented its new strategy for attracting companies to the country, focusing on high-tech, research and innovative enterprises. The implementation of this plan begins already in January 2022.
Cyprus is gradually becoming the IT-business center of Europe, with the most favorable investment climate for cryptocurrency transactions. The efforts made by the government could not but affect the attitude of business towards new financial instruments. A number of developers and homeowners in Cyprus are already ready to sell their properties for cryptocurrency. Every day there are more and more of them.
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