Are you on a home-buying journey for your new family? Maybe you’re looking for a second vacation home or an investment in for-rent real estate. Propy collaborated with Coinbase Prime and we have your back during the whole buying and closing process!
Here’s a guide on how to buy a property with cryptocurrency or use it as a downpayment, securely.
Why Crypto Real Estate is Important?
Since 2017, the intersection of cryptocurrency and real estate is creating exciting new opportunities for investors and homebuyers alike.
The global cryptocurrency market cap grew beyond $2 trillion as of October of 2024 while the US real estate market is valued at the astonishing $40+ trillion.
The potential for synergy is enormous.
The Rise of Crypto in Real Estate
The rise of crypto investors and HODLers transforms how people make everyday purchases.
The real estate industry is taking serious note. Property brokerages and agents are adopting blockchain technology to tap a new group of buyers and sellers and gain an edge over traditional practices.
The growing wealth of early crypto adopters and traders is driving demand for real estate, further heating up the market. Moreover, smart contracts have proven reliability for transactions and record keeping, making the entire process faster and more efficient – think completing a home purchase in 24 hours.
Enter Propy’s innovative Crypto Escrow Service – a game-changing solution set to transform how high-value transactions are conducted using digital assets like Bitcoin, Ethereum and USDC.
Why is Propy’s new service so significant for the real estate market? Let’s first look at some key statistics:
• Over 50 million Americans held or used crypto in 2023.
• More than 400 million wallets actively use crypto globally.
• 12% of first-time home buyers in America used cryptocurrency to afford their purchases or downpayments in 2023.
• The average home price in the US reached $430,000 in 2024.
As more people accumulate wealth in cryptocurrencies, they’re looking for ways to tap this value in make-sense ways within traditional markets like real estate.
What Exactly is Crypto Escrow?
Crypto escrow is a secure method of holding cryptocurrency funds during a transaction process. An escrow service is a neutral third party, ensuring both the buyer and seller fulfill their obligations before the funds are released. This adds an extra layer of security and trust to high-value transactions such as home purchasing.
The Need for Crypto Escrow in Real Estate
Buying or selling real estate for cryptocurrency has traditionally posed several challenges:
1. Early conversion risks
Converting crypto to fiat currency too early can trigger capital gains taxes. With the IRS reporting $5 billion in realized crypto gains in 2022, this is a significant concern for many investors.
2. Market volatility
Cryptocurrency prices can fluctuate significantly during the typical 30-day closing process. For instance, Bitcoin’s price fluctuated by over 20% within a single month multiple times in 2023.
3. Deal fall-through risks
If a deal falls through after converting crypto to fiat, buyers face the cost and hassle of repurchasing crypto. With about 4% of real estate contracts falling through in 2022, this is a real concern.
How Propy’s Crypto Escrow Service Works
Propy’s new service, powered by Coinbase Prime custody solutions, addresses these challenges head-on. Here’s how it works:
1. Secure Holding
Crypto funds are held securely in escrow using Coinbase’s trusted custody solution throughout the closing process on the Propy platform. Coinbase Prime has over $130 billion in quarterly institutional trading volume, ensuring robust liquidity.
2. Delayed Conversion
The cryptocurrency is only converted to fiat currency at the final stages of the property transaction. This approach minimizes exposure to market volatility and potential tax implications.
3. Seamless Integration
The service is integrated with Propy’s advanced closing protocol and Title and Escrow Agency, creating a comprehensive framework for crypto-based real estate transactions.
Benefits of Using Propy’s Crypto Escrow Service
1. Security
Funds locked in a deal escrow are protected by Coinbase’s industry-leading custody solution, which secures over $25 billion in crypto assets.
2. Tax Efficiency
By delaying conversion, buyers can potentially minimize their tax liability. Given that crypto gains are taxed at rates ranging from 10-37% depending on income bracket, this could result in significant savings.
3. Flexibility
Supports transactions using Bitcoin, Ethereum, or USDC. These three assets alone represent over 70% of the total crypto market cap.
4. Compliance
As a US-licensed title company, Propy ensures all transactions meet regulatory requirements. This is crucial in a landscape where regulatory clarity is still evolving.
5. Simplicity
The blockchain-enabled process mirrors traditional real estate closings, making it user-friendly for all parties involved – buyers, sellers and agents.
Best of all, the Propy Crypto Escrow Service isn’t just for residential real estate. It can be used for a variety of high-value transactions, including commercial real estate purchases, a $20+ trillion market in the USA alone, and international property investments with $250+ billion of cross-border deals annually.
How Would Your Transaction Unfold in Practice?
Let’s consider a hypothetical scenario to illustrate the benefits of Propy’s Crypto Escrow Service.
John, a crypto investor, wants to buy a $500,000 home using his Bitcoin holdings. At the start of the 30-day closing process, 1 BTC is worth $50,000, so he needs 10 BTC for the purchase.
Scenario A (Without Crypto Escrow):
John converts 10 BTC to $500,000 at the start of the process. By closing day, BTC price has increased to $55,000. John has lost out on $50,000 of potential gains and may face immediate capital gains tax on his $500,000 conversion.
Scenario B (With Propy’s Crypto Escrow):
John’s 10 BTC is held in escrow. On closing day, BTC is worth $55,000. Only 9.09 BTC needs to be converted to reach $500,000, saving John 0.91 BTC (worth $50,000). John also defers any capital gains tax until the actual conversion of crypto to fiat.
This simplified example demonstrates how the Propy Escrow Service can protect buyers from market volatility and optimize their crypto holdings.
The Bigger Picture: Transforming Real Estate Transactions
Propy’s Crypto Escrow Service is more than just a tool for individual transactions – it’s part of a larger trend toward tokenization of real-world assets. By 2025, the World Economic Forum predicts that 10% of global GDP will be stored and transacted via blockchain technology. Real estate, one of the largest asset classes globally, is taking the lead in this digital transformation.
With a secure, efficient, and compliant system to use cryptocurrency in real estate transactions, Propy is helping to increase liquidity, expand access globally and improve efficiency.
Blockchain-based transactions can reduce closing times drastically, once a property is onchain. The average closing time for a home purchase in the U.S. is currently 50 days.
Blockchain technology provides an immutable record of transactions, which could reduce fraud in real estate by boosting transparency. Real estate fraud losses in the US totaled over $400 million in 2023.
As the first US-licensed title company operating in the crypto space, Propy is at the forefront of bridging the gap between digital assets and real-world transactions. The new Crypto Escrow Service, powered by Coinbase Prime, offers a secure, efficient, and compliant way for cryptocurrency holders to participate in high-value transactions like real estate purchases.
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