Virtual currencies such as Bitcoin and Ethereum are actively used to buy goods and services including real estate. Dubai has gone further than most countries and has become the first to introduce the option to sell, lease or buy property with cryptocurrency or bitcoin.
The crypto market can be extremely volatile at times, therefore a large number of crypto investors are transferring their funds to a more stable investment such as real estate.
Cryptocurrency is basically a digital version of money based on cryptographic technology or a code that can’t be changed. Cryptocurrency works on blockchain technology which is essentially a decentralized database that cannot be changed or hacked.
VARA, established to provide a secure and progressive operating framework for the virtual asset (VA) sector to be able to scale, while assuring market and investor protection, expects to regulate the governing principles of the services and activities, rather than the continually-evolving products and underlying technologies. This bold move reflects Dubai Government’s confidence in Virtual Assets being integral to the future digital economy, and its readiness to establish the Emirate as the world’s Virtual Assets Capital. Dubai’s Virtual Assets Regulatory Authority (VARA) announced its entry into the Metaverse with the establishment of its Metaverse HQ in the dynamic virtual world of ‘The Sandbox’.
As the world’s first regulator to make its debut in the Metaverse, VARA seeks to ensure that the regulator is accessible to its industry in their environment, and facilitate collaborative engagement between global Virtual Asset Service Providers (VASPs), Industry Thought-leaders, and International Regulatory Authorities.
Due to these types of projects, the country should advance governmental efficiency, industrial development and international leadership. Blockchain strategy initiatives led by Sheikh Mohammed bin Rashid Al Maktoum will help make Dubai a prosperous city.
The cryptocurrency system and blockchain are implied actively through economics and will help to conduct business without any bureaucracy. Blockchain is going to be used in real estate to create a register of all Dubai real estate, which will be developed by the Dubai Land Department (DLD).
If you are looking to sell, lease or buy property in the Dubai with cryptocurrency, you are advised to work with companies who have already successfully worked with such transactions.
Paragon Properties work with a reputable financial intermediary who has flawless reputation in the digital market sphere and is licensed from the Dubai Economic Department. The trade license allows them to accept the cryptocurrency and convert into UAE dirham (AED). (Even though you are obtaining property with a cryptocurrency, you will not be able to pay for it directly. The Central Bank of the UAE requires that all transactions on the territory of the country should be made in the national currency. Therefore, you need to transfer your digital currency to the trading company and then wait to receive a cheque with the agreed amount of money with which you can pay for the property.)
The operation can be carried out in any cryptocurrency you want such as Bitcoin, Ethereum, Usdt and other digital currencies, at the rate which was fixed during the transaction at the central office of the trading company. The price of a transaction will be formed according to the current cryptocurrency rate and the commission amount can be discussed with the company beforehand.
The process of obtaining cryptocurrency is quite easy. The buyer should open a cryptocurrency wallet in case he/she doesn’t already have one. The registration of the wallet can be done by an individual or a legal entity. A real estate purchase transaction usually starts from the choice of the property and then the discussion of terms and conditions, no matter what payment method was chosen. At this stage, a buyer and the seller discuss the key parameters of the transaction which later will be written in the purchase and sale agreement. The price of the chosen property in AED is converted into cryptocurrency, for example, Bitcoin. The sum is written in the agreement and cannot be changed. The seller and the buyer are not responsible for possible changes in the exchange rate.
After this, the buyer should send the agreed cryptocurrency amount to the digital wallet of a trading company and pay off the commission amount. Then the buyer is given a cheque in AED so he/she can transfer the needed amount of money to an escrow account of the chosen property, if the transaction is for an off-plan property, or transfer the funds to the seller’s account. In case you are planning to make a direct purchase from the developer, you will need to sign a special form of agreement about the transaction from a third party. The cheque is then given to a developer and a buyer receives a notification regarding the transfer of money. If a buyer is interested in a completed property, you can pay for the unit after receiving the cheque in AED. After that, the real estate agent will work on the transaction and help with obtaining the Title Deed.
It’s worth noting that due to rate fluctuations the transaction of either the purchase contract or the rental contract can become unprofitable for one of the parties and the agreement can then be dissolved. Apart from the commission to the trading company for their services, a buyer should pay a registration fee to the DLD, which is 4% of the total cost of a property and a commission for real estate agent services (2%).
To buy property with cryptocurrency, you will need the same documents that are required for a usual monetary transaction. First of all, a preliminary agreement is written in English or Arabic. It is then important to use the services of a professional real estate agent who will help you to choose the property, collect and prepare documents and fill the contract correctly.
Paragon Properties pride ourselves on making this a seamless process for both buyer and seller, managing each aspect of the buying process.
Contact us today to find out more information.