Several years ago, the prevailing bear case against bitcoin was that there simply was no use for the digital currency: one can buy up all of it, but besides selling to a "greater fool" there was simply no other use for the digital token. Since then thing have changed a lot: not only is institutional adoption now rampant with corporations and asset managers loading up, but increasingly merchants are bracing for the inevitable popular adoption of cryptos as a payment mechanism, with both Walmart and Amazon quietly building out an internal infrastructure to accept and transact in various cryptocurrencies. And soon, Americans will be able to pay down their mortgage debt in bitcoin first, and soon other cryptos.
Last week, United Wholesale Mortgage - second-largest mortgage lender in the US - announced it was planning to accept Bitcoin for home loans in 3Q21 and is evaluating on accepting other cryptocurrencies like ether.
The revelation that United Wholesale Mortgage will start taking crypto payments sometime in Q3 was made during its earnings call last week. The company said it would will start taking bitcoin payments first, and is researching in consideration of adding ether and other cryptocurrencies later. Its CEO, Mat Ishbia, stated:
We’ve evaluated the feasibility, and we’re looking forward to being the first mortgage company in America to accept cryptocurrency to satisfy mortgage payments.
The company, which emerged as a result of a SPAC merger in January, is not directly connected to customers. Instead, it uses brokers to link customers and loans. According to bitcoin.com, the company didn’t explain if the cryptocurrency received would be kept as such or exchanged for fiat money.
If the company manages to achieve its goal, we might see mortgages paid in crypto before the end of this year. The cryptocurrency payments space has been warming up all this year due to the heightened interest in digital assets. In March, one of the biggest payment processors, Paypal, introduced a new feature called “Checkout with crypto,” which enables users to pay with cryptocurrency in millions of online stores.
However, there is still a roadblock for the adoption of cryptocurrency payments in the U.S. Cryptocurrency can be considered property in the country, and paying with crypto can be considered a sale. This means that depending on the buying price, crypto holders might have to pay capital gains tax even when using bitcoin to pay for their mortgage loans.
In other countries with less stringent regulations, crypto is already used for real estate payments. As Bitcoin.com notes, this is the case in Venezuela, which recently recorded one of its first public sales of a property paid for with cryptocurrency. This payment method is said to have many advantages such as not depending on the approval of banks, cutting paperwork, and slashing processing times from two weeks to just hours.