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. Brokerages are also hosting cryptocurrency seminars for their agents to learn how to 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?’” Alex Sapir, a Miami developer, told The Wall Street Journal. 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.”
Only a few luxury real estate transactions have been completed using cryptocurrency. In the majority of cases, sellers transfer the cryptocurrency to U.S. dollars to close on the real estate transaction. However, some developers are allowing it to be used more in real estate. PMG has 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 are’nt at the mercy of the 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 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.