I am selling a property in the Caribbean and the US buyers would like to pay me in cryptocurrency.
I have only used bitcoin occasionally but wonder if it would be a good way to transfer this considerable amount of money ($1million-plus) to me in Britain.
How would you suggest I go about it and would you recommend it?
Crypto transaction: A large transfer like this comes with huge risks, not least because of volatility
Angharad Carrick, of This Is Money, said: While cryptocurrency can and has been used for property transactions – in December 2017, a house in Essex is believed to be the first property to be bought using bitcoin – it is still not a widely accepted currency.
The main benefit of using crypto is that the transactions don’t involve financial institutions and can be transferred instantly. But that can also throw up some red flags.
Given there is little to no regulation around crypto it is unsurprising that you are cautious of your buyers’ proposition.
Leading cryptpcurrencies like bitcoin and ethereum have been volatile in recent months.
Bitcoin is down 18.81 per cent over the past six months after the most familiar name in cryptocurrency neared a high of $70,000.
Ethereum has plummeted 23.41 per cent in the same period.
Given the time it takes to sell a property, the value of the cryptocurrency offered to you may plummet. It is a risky business.
Glen Goodman, crypto expert and author of The Crypto Trader, replied: My first question would be why do they want to pay you in a cryptocurrency?
They may have a perfectly legitimate reason to own so much cryptocurrency, just as someone might have a perfectly legitimate reason to pay you with a suitcase full of £50 notes.
‘But it’s sometimes used as a money-laundering technique or to illegally avoid tax by keeping the payment outside of the international banking system.
‘If their reasons appear to be legitimate, you would be well-advised to instruct a specialist cryptocurrency solicitor who has dealt with these conveyancing issues before.
‘Transferring such a large amount of money using decentralised crypto networks can sometimes be cheap and easy, but it’s not without its risks.
‘If something goes wrong, there may be no higher authority to appeal to.’
Angharad Carrick said: As Glen says, you will want to understand why the prospective buyers want to use crypto.
If it is merely a question of convenience you should weigh up whether it is worth taking the risk, given the volatility of currencies at the moment, for the buyers.
Using cryptocurrency for this kind of transaction may slash the cost of fees but platforms like Coinbase will still charge you for withdrawals.
Huong Hauduc, general counsel at crypto platform BEQUANT replied: ‘There are lots of challenges in this transaction but theoretically, there should be no reason why you cannot accept cryptocurrencies as the legal tender in this transaction.
‘However, you will need to speak to a lawyer in the jurisdiction where the house is to ensure that the deeds and the applicable property law recognise property purchases to be paid using digital currencies and that they are enforceable.’
‘Assuming the applicable property law recognises digital currencies, there are also additional issues to consider if you choose to accept the offer in crypto.
‘First of all, cryptocurrencies, such as bitcoin, are highly volatile.
‘Due to the volatility in the value of bitcoin, your agreed price in bitcoin could be less than what you would receive in dollars.’
‘Secondly, if you chose to use a stablecoin, such as Tether (USDT) – a coin that is tied to the price of the US dollar – there is a risk that the companies backing this digital currency may not have the dollars to actually pay you when you want to cash out.
‘So there is a risk of using stable coins for large transactions.’
‘Thirdly, if you decide to accept bitcoin or any other digital currency for the house, you will need to set up an account with a crypto exchange to receive the money.
‘If that exchange is not reputable, they could run off with your assets or their systems could be hacked.
‘Therefore, you need to choose a crypto exchange that is regulated and has a stringent AML process. This way, you can be confident you can cash out when you want to.
‘Be also aware that there maybe tax implications and it will be more complex to pay the tax on gains made through crypto, so consider that challenge.’
‘In addition, be aware that each transaction – i.e. transferring your USDT or BTC to GBP – will incur a fee.
‘This is usually a percentage of the value of the transaction, so you will need to pay that to withdraw your money. Some exchanges can have high fees, so shop around to get the best deal.’
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