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MIAMI (AFP) - Bitcoin fever has hit
the US real estate market, especially that of Florida, offering foreign
investors a way to dodge currency controls at home and US economic
sanctions.
As of the end of last year, the
digital currency was listed as a way to pay for some 75 properties for
sale, especially in south Florida and California, according to the real
estate firm Redfin.
"Bitcoin accepted" is a message now seen in the description of homes for sale in the Miami area.
One seller is going even farther,
saying he will take only bitcoin (33 of them to be exact) for his
half-million-dollar downtown condo in the Florida metropolis.
Bitcoin has been on a roller coaster
ride of late, shooting up to nearly US$20,000 (S$26,500) a piece in
mid-December and then dropping sharply around Christmas. It started the
year at around US$14,000.
Its use in real estate transactions is novel, and agents are wary because of its high volatility.
"I'd be blown away if a year from
now we see hundreds of real estate transactions in bitcoins," said Jay
Parker, Florida CEO for the Douglas Elliman brokerage agency.
Still, such transactions can be
useful for foreigners who want to invest in the United States and cannot
otherwise do so, said economist and bitcoin expert Charles Evans of
Barry University.
"This seems to be driven by
international investors who are circumventing inefficient banking and
currency controls at home, and by US cryptocurrency enthusiasts," Evans
told AFP.
"The governments in those countries
restrict the amount of money that their residents are allowed to
transfer abroad through the banking system.
Bitcoin enables individuals there to bypass such restrictions," he added.
This could be a draw for investors,
who even before the bitcoin rage were already hot on the real estate
market in south Florida.
Nearly half of all foreign buyers of property in south Florida are from Latin America.
According to the National
Association of Realtors, over the past five years, investors from
Venezuela, Brazil and Argentina - in that order - have led purchases in
this part of the state.
MONEY LAUNDERING?
Bitcoin offers another advantage for some foreign investors: it lets them dodge US economic sanctions.
Evans cited the example of
Venezuela, which imposes strict currency controls and is enduring
runaway inflation that surpassed 2,600 percent in 2017.
What is more, many senior officials
in the government of Venezuela's President Nicolas Maduro have been hit
by sanctions imposed by Washington, which considers his administration a
dictatorship.
Evans said there is also a lot of
interest in bitcoin among Iranians, whom he described as "doubly hit"
with restrictions in Iran and international sanctions.
It is an open secret that money
laundering fuels the real estate market in south Florida. But instead of
hiding the practice, bitcoin could have the opposite effect.
The crypto currency "is a terrible
medium for large-scale money laundering, because all bitcoin
transactions are recorded in the publicly available transaction record
known at the Blockchain," said Evans.
Although bitcoin has been associated
with the drug trade and cyber attacks, Blockchain "leaves a lot of
fingerprints," former Florida representative Jose Felix Diaz told
Politico.
"So if you're using it for
illegitimate reasons, the state and the federal government should have
every tool at their disposal to go after you," Diaz said.
Last year, Diaz sponsored a bill-turned-law that includes bitcoin in Florida's laws for fighting money laundering.
Real estate agent Parker also said
money laundering via bitcoin is far from posing a risk because "the
beneficial owners of the real estate are always going to be able to be
traced."
Parker said the fad of doing real estate deals in bitcoin could be as volatile as the currency itself.
"I think it's a gimmick. There's not
much risk. The only risk is if the currency crashes before you can
liquidate it," said Parker.
"I think the people that are using
bitcoins to try to market their properties are doing it with the very
purpose of getting you to write about it, getting their properties
exposure," said Parker.