An estate agent has warned about the pitfalls of permitting house sale transactions in the cryptocurrency Bitcoin, as its value tumbled.
Bitcoin’s value was down by more than 16% yesterday, falling by $2,000 to as low as $10,000 on the Luxembourg-based Bitstamp exchange amid fears that Russia, China and South Korea may crack down on trading. Other cryptocurrencies such as Ethereum and Ripple have also dropped in value.
Chinese state media reported that the government was planning to stamp out remaining cryptocurrency trading in the country following a crackdown last year.
Meanwhile, Russian premier Vladimir Putin said that “in broad terms, legislative regulation will be definitely required in the future”.
Bitcoin has gradually been gaining in popularity among house buyers and sellers.
In September last year, EYE reported how Worcestershire-based high street letting agent Property Plus would allow agency fees and deposits to be paid in Bitcoins.
And Go Holdings, including estate agency Go Move, covering Hertfordshire and a new homes development company, Go Homes, claimed in December 2017 to be the first agent in the world to sell a home through Bitcoin.
Meanwhile, the Land Registry suggested it would record payments for homes in Bitcoin, even if it didn’t actually recognise the currency.
But Russell Quirk, founder of Emoov, issued a warning about agents adopting the use of cryptocurrencies.
He told EYE: “It would seem that rather than moves being made to legitimise the use of cryptocurrencies, authorities around the world are looking to do the opposite and crackdown on the use of these various forms of coin.
“This latest landslide in values further highlights the volatility of these currencies and utilising them in an already precarious process such as the sale of a house, would be a very risky move indeed.
“There are already a number of things that can disadvantage a smooth sale and in these current slower market conditions, I would strongly advise buyers to settle for a more tangible method of payment rather than gamble on something as unpredictable as cryptocurrencies.”
Some mortgage lenders have also taken a dim view of cryptocurrencies and have turned away those who have made money through Bitcoin and wishing to buy a house because of money laundering concerns.
Mark Stallard, a broker and principal at House and Holiday Home Mortgages, told the Daily Mail that one public sector worker who made £40,000 from investing in digital currencies was refused a mortgage as he was unable to prove where he obtained the money.
He said: “The first mortgage lender I rang asked me what a cryptocurrency was. I rang two other lenders and they said they would not touch it.”
Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, a trade body for mortgage brokers, told the Financial Times: “The money-laundering aspect of cryptocurrency is the most complex issue here because it’s hard to prove where the initial investment came from.”