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Second largest US mortgage lender will accept crypto payments this year

fxstreet.com

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Re: Second largest US mortgage lender will accept crypto payments this year

#21

Post by hellbannedguy »

ohazi wrote: post #11
arthurcolle wrote: post #3

Earlier quoted context omitted.

People with substantial amounts of crypto would like to be able to finance larger purchases directly in crypto without needing to liquidate into fiat first

Yes, money launderers and tax evaders would like to continue laundering and evading -- I think the real question is why are we making this easy for them? Buying property with ill-gotten gains is an extremely common method of money laundering. Having a large hoard of cryptocurrency that you prefer not to liquidate screams "I'm trying to pretend that this isn't a taxable event." We don't let people pay their mortgages…

The ease at which we let foreigners buy our American Real-estate has been bothering me for years.

I can't prove it, but it seems like too much foreign capital that is buying our land is ill gotten, and allowing crypto is just going to make it worse.

I believe we are the Only country that allows foreigners buy property with a phone call, or email.

Re: Second largest US mortgage lender will accept crypto payments this year

#23

Post by morpheos137 »

ohazi wrote: post #11
arthurcolle wrote: post #3

Earlier quoted context omitted.

People with substantial amounts of crypto would like to be able to finance larger purchases directly in crypto without needing to liquidate into fiat first

Yes, money launderers and tax evaders would like to continue laundering and evading -- I think the real question is why are we making this easy for them? Buying property with ill-gotten gains is an extremely common method of money laundering. Having a large hoard of cryptocurrency that you prefer not to liquidate screams "I'm trying to pretend that this isn't a taxable event." We don't let people pay their mortgages…

Because "technology."

Re: Second largest US mortgage lender will accept crypto payments this year

#24

Post by quantumBerry »

vvarren wrote: post #19

So my understanding is that you’d owe a set amount in Fiat but you can make payments in crypto. Would you be locked into crypto for payments, at a designated fiat value or designated crypto value? Because if you borrowed in crypto for a house and then the price of crypto skyrocketed you would be screwed. Seems like a nice option for people trying to short the crypto market, but I doubt this has much viability. Compan…

Nearly certainly everything would nominally be in fiat and at the time you pay in crypto, they would credit you the value of the crypto at the time of payment.

I can't imagine they're going to go through the effort and risk of effectively hedging their crypto risk through securities markets, which would come at a premium.

Re: Second largest US mortgage lender will accept crypto payments this year

#25

Post by jonas21 »

> The use of crypto in real estate purchases has a history dating back seven years, with BitPay helping facilitate the sale of a Lake Tahoe property that sold for $1.6 million in BTC in 2014.

In case anyone's wondering, it was 2,739 BTC, which would be worth around $127M today.

See: https://www.wsj.com/articles/lake-tahoe-property-sells-for-1...

Re: Second largest US mortgage lender will accept crypto payments this year

#26

Post by Finnucane »

vvarren wrote: post #19

So my understanding is that you’d owe a set amount in Fiat but you can make payments in crypto. Would you be locked into crypto for payments, at a designated fiat value or designated crypto value? Because if you borrowed in crypto for a house and then the price of crypto skyrocketed you would be screwed. Seems like a nice option for people trying to short the crypto market, but I doubt this has much viability. Compan…

Given the volatility of Bitcoin it would be real rate risk for the lender. I mean, over decades? There’s no way to price that.

During the great bubble, borrowers in Eastern Europe got mortgages in Swiss francs. When the market collapsed and the exchange rate sank, they were completely fucked. Don’t borrow in currency you can’t easily get your hands on.

Re: Second largest US mortgage lender will accept crypto payments this year

#27

Post by quantumBerry »

ohazi wrote: post #11
arthurcolle wrote: post #3

Earlier quoted context omitted.

People with substantial amounts of crypto would like to be able to finance larger purchases directly in crypto without needing to liquidate into fiat first

Yes, money launderers and tax evaders would like to continue laundering and evading -- I think the real question is why are we making this easy for them? Buying property with ill-gotten gains is an extremely common method of money laundering. Having a large hoard of cryptocurrency that you prefer not to liquidate screams "I'm trying to pretend that this isn't a taxable event." We don't let people pay their mortgages…

Payment with crypto is a taxable event whether it is converted into USD or not. You will pay capital gains or income on the delta of the value of the currency at the time of transaction.

This doesn't make it any easier to evade taxes than it would if you paid with cash. The IRS can subpoena your payments and tax the value of the crypto at time of transaction. If you don't report the sale (payment) of the asset on your taxes, there will be a mismatch that is easily traceable.

This is just the real estate industry adding artificial value by catering to the crypto market.

Re: Second largest US mortgage lender will accept crypto payments this year

#28

Post by wc- »

ohazi wrote: post #11
arthurcolle wrote: post #3

Earlier quoted context omitted.

People with substantial amounts of crypto would like to be able to finance larger purchases directly in crypto without needing to liquidate into fiat first

Yes, money launderers and tax evaders would like to continue laundering and evading -- I think the real question is why are we making this easy for them? Buying property with ill-gotten gains is an extremely common method of money laundering. Having a large hoard of cryptocurrency that you prefer not to liquidate screams "I'm trying to pretend that this isn't a taxable event." We don't let people pay their mortgages…

I buy a house with a mortgage, I owe $1k a month or whatever to this company to pay my mortgage. If I pay with bitcoin it is a capital gains event to convert it to USD and I would owe capital gains taxes on the $1k per month or whatever my payment is.

It's the same as if I were to convert the bitcoin to dollars on my own and pay via dollars. Taxes are still paid in this scenario just as they would be if I converted the bitcoin to dollars and did whatever else with it...

Why so angry about this?

Re: Second largest US mortgage lender will accept crypto payments this year

#29

Post by ahnick »

mc32 wrote: post #9

Will people using crypto to buy/finance houses need to provide documentation regarding the provenance of the funds as well as being in the clear around any tax declarations? If not, there would likely be some who see this as a vehicle to clean up some holdings, depending on provenance.

Is documentation for the provenance of funds, typically required in all cash real estate transactions?

Re: Second largest US mortgage lender will accept crypto payments this year

#30

Post by quantumBerry »

Finnucane wrote: post #26
vvarren wrote: post #19

So my understanding is that you’d owe a set amount in Fiat but you can make payments in crypto. Would you be locked into crypto for payments, at a designated fiat value or designated crypto value? Because if you borrowed in crypto for a house and then the price of crypto skyrocketed you would be screwed. Seems like a nice option for people trying to short the crypto market, but I doubt this has much viability. Compan…

Given the volatility of Bitcoin it would be real rate risk for the lender. I mean, over decades? There’s no way to price that. During the great bubble, borrowers in Eastern Europe got mortgages in Swiss francs. When the market collapsed and the exchange rate sank, they were completely fucked. Don’t borrow in currency you can’t easily get your hands on.

There is a way to price it, there are perpetual futures market for popular coins. You would pay the premium for those futures but by shorting or buying futures you can lock in value within a few percent.

For example, if i expect 1 bitcoin 10 years from now, I sell a future contract promising to sell 1 bitcoin at $45,000. If the price falls 5,000 over 10 years, the value of my contract is now worth $5,000 plus the 40,000 value of the coin. If I am on the opposite side and have to pay in bitcoin, I can buy a futures contract for 1 bitcoin at 45,000. If the price of bitcoin rises I am offset by the value of the futures cotnract and if the price falls the negative value of the futures contract locks my price at ~45,000.

The cost here is the premium of the futures contracts, which of course could make it more expensive to operate a crypto mortgage in the long run.

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