Cryptocurrency exchanges for property seemed like a distant - and even unlikely - scenario just a few years ago. It still isn’t very common; however, many developers in Dubai are slowly and surely making this a reality.
Dubai is beginning to embrace the idea of accepting cryptocurrency as a method of payment for property, and as cryptocurrency payment options are becoming more commonplace, cash and financing are no longer the only ways to invest in Dubai’s thriving real estate landscape. The recently announced crypto laws are set to further strengthen the standing of these virtual forms of currencies, and the fact that they will now be regulated is bound to boost the confidence among industry stakeholders manifold.
Current reality on virtual fiats
So, can you go and exchange a physically non-existent currency for a tangible asset, a home? The answer is yes, but with a slight detour. As of now, cryptocurrency property purchases in Dubai are fundamentally cash transactions.
What exactly happens is that a cryptocurrency is first converted into cash by a crypto exchange house or brokerage firm. Once the conversion is done, only then can the transaction take place. This is because the use of virtual currencies as a mode of payment is not yet approved by the UAE’s Central Bank.
However, Dubai is taking proactive steps in this realm, having enacted Law No. 4 of 2022 with the establishment of the Dubai Virtual Assets Regulatory Authority (VARA) to lead the emirate into a safe and regulated future of virtual assets, including crypto and non-fungible tokens (NFTs).
For now, the entire property purchasing process is still more akin to the traditional use of a home loan or cash to secure a deal for a given property, rather than some sci-fi-inspired virtual world transaction. More developers are offering the option to pay through these still novel methods, but it is far from becoming the go-to route.
That does not mean this will never become a reality – we are increasingly moving into the direction of virtual assets, including their use for transactions.
Why choose crypto?
Using virtual assets as a mainstream mode of payment for real estate transactions would come with a bouquet of benefits. Crypto purchases are cheaper due to the reduced transaction costs - considerably lower than in conventional modes of payment. Leading crypto exchanges charge substantially less in fees than traditional financial institutions for the movement of funds, effectively reducing costs for all stakeholders.
Moreover, digital currency sales are much more convenient as they can be completed almost instantaneously. No transferring money between foreign banks or currency conversions, which can often take days – you just pay for what you buy, instantly.
Another major advantage is that a crypto transaction requires far less paperwork. This makes procedures less time-consuming, and entails heightened simplicity and ease.
Proceed, but with caution
If after careful consideration of the pros and cons, you find yourself inclined to take this route, here are a couple of pointers you must be aware of:
In Dubai, developers may not issue or sign SPAs that have Bitcoin or any other form of crypto listed as the currency. In short, sellers and buyers have to complete the transaction via a licensed crypto-trading business, a third-party broker that does the conversion for them. It is therefore not a direct deal, unlike commonly believed. Developers that accept Bitcoin or any other crypto as a mode of payment will always finalise their SPAs in the UAE’s local currency and receive government-issued fiat money.
When purchasing property with a cryptocurrency, it is important that you select a licensed trading firm and check its legality by ensuring that the services it offers adhere to the local laws. Well-established, known developers generally have such approved trading partners they can recommend, facilitating your purchasing process.
In a nutshell, the UAE’s laws do not yet permit property being sold or bought with cryptocurrencies directly. The emirates necessitate the use of their many registered third-party services for such transactions to ensure that all is done in accordance with the law and in line with the currently established rules and regulations.
Dubai continues to evolve as a pioneering hub of technology and innovation, and as such, we can expect further legal frameworks being established as the world of cryptocurrencies rapidly gains traction and investors seek to pay with new mediums of exchange, for the benefit of all.