Real Estate Transactions

Can you buy or sell real estate using cryptocurrency?

A small but growing trend in real estate is buying and selling homes using cryptocurrency. Considered a big win from crypto enthusiasts, these types of real estate transaction advances cryptocurrency into the mainstream as a more powerful player in financial investment.

The first real estate sale using cryptocurrency occurred in September 2017 in a deal mediated by Kuper Sotheby’s International Realty in Austin, Texas. This was made possible as both the buyer and the seller agreed to a cryptocurrency transaction. For an undisclosed amount, the buyer used BitPay (a Bitcoin payment service provider) to exchange Bitcoin to U.S. dollars and ten minutes later the deal was done.

Some may think that this property purchase in 2017 was just a one-off or a fad but more and more real estate agencies are listing homes in both fiat currency and cryptocurrency. In fact, any piece of real estate can be purchased or sold using cryptocurrency like Bitcoin and Ethereum, however, for such a transaction to occur the proper structuring of the transaction and professional services like exchanges, banks, attorneys, and title companies are necessary.

What is necessary to buy real estate with cryptocurrency or Bitcoin?

Crypto investors have become interested in diversifying their investment portfolios. Part of that is using their crypto to invest in real estate. As stated, this is completely possible and there are two ways a person can buy and sell real estate using cryptocurrency, or more popular, using Bitcoin. We’ll use Bitcoin for this discussion as it is the most well-known and used cryptocurrency for real estate.

All-Bitcoin Real Estate Transaction

The first kind of real estate transaction using Bitcoin is an all-Bitcoin real estate transaction. In an all-Bitcoin real estate transaction, the seller of the property must agree to accept Bitcoin from the buyer as a form of payment. For the transaction to occur, a Bitcoin payment must be transferred from the buyer’s digital wallet to the seller’s digital wallet for the full purchase price (similar to an all-cash purchase). Intermediaries like an attorney, the title company, and an escrow service will be involved.

There are few complications when conducting an all-Bitcoin real estate transaction, but it is nothing that can’t be done.

  • There are no banks involved in an all-Bitcoin real estate transaction. Because there are no banks involved in an all-Bitcoin transaction, there is protocol that would normally be performed by a banking system but in this instance the seller or seller’s attorney must follow certain protocol in order to help mitigate the risk of fraudulent and illegal behavior on the title of the buyer. A seller or the seller’s legal representation would conduct Know Your Customer (KYC) and Anti-Money Laundering (AML) checks on the buyer to ensure the buyer is legitimate and the Bitcoin used to make the purchase was acquired by legal means and is not used for money laundering. Additionally, checking the U.S. Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals (SDN) List and Politically Exposed Persons (PEP) List is necessary. If the buyer or buyer company is on the SCN List then their assets are blocked and U.S. residents are prohibited from working or making any transaction with them. People or companies on the SDN List have been identified as international criminals, terrorists, and drug traffickers, just to name a few. The PEP List is a list of people or companies that potentially have involvement in high-risk situations like bribery or corruption due to their position and influence within the public. An AML check will generally help identify persons on the PEP List.
  • The seller must verify the buyer. As mentioned above, security and fraud prevention are a number one priority in an all-Bitcoin real estate transaction, especially from a government regulations standpoint. The seller or the seller’s legal representatives will need to verify the buyer through KYC and AML compliances to ensure the buyer’s Bitcoin is not coming from a terrorist organization or someone who uses crypto for illegal purposes (e.g., money laundering, drug trafficking).
  • The volatility of Bitcoin, in general, is a concern for both buyers and sellers. The crypto market is a highly volatile space, and the price of Bitcoin can radically fluctuate. This can raise concern for both buyers and sellers of all-Bitcoin real estate transactions because when a transaction is made the Bitcoin could dramatically increase or decrease in value the very next day. Because of this volatility, some all-Bitcoin real estate transactions will have a legal contract drafted to specify the Bitcoin’s worth at closing.
  • The sale will require an appropriate digital escrow solution. It can be challenging to find a digital escrow solution as all-Bitcoin transactions are new to real estate, however, there are a growing number of specific licenses a person can get to perform the duties of storing digital assets.
  • Tax implications. As of July 2021, the IRS has classified cryptocurrency as property for tax purposes. This means the exchange, spending, or selling of any crypto is considered a taxable event—just how stocks and other capital assets are treated. So, in the event of an all-Bitcoin real estate transaction, both the seller and the buyer will (in all likelihood) pay taxes. On one side of the real estate transaction, should the seller decide to sell the Bitcoin they made from the real estate sale for fiat money, the seller can expect to pay capital gains taxes based on that income. And on the other side of the real estate transaction, the buyer can expect to pay capital gains tax based on whatever appreciation the Bitcoin made from the time the Bitcoin was purchased to the time of the real estate sale. Additionally, there are a number of other regulations that are applied if the seller is not a U.S. resident.

Bitcoin to Fiat Real Estate Transaction

The second kind of real estate transaction using Bitcoin is a Bitcoin to fiat/U.S. Dollar. This transaction would occur if the seller of the property refuses to accept Bitcoin as payment and requests the buyer exchange their Bitcoin to fiat currency or the U.S. Dollar (if the sale is in the United States).

Purchasing real estate with Bitcoin to fiat is not as in-depth as an all-Bitcoin transaction but there are some of the same aspects to the process.

  • The buyer will need to sell their Bitcoin for fiat through their chosen crypto exchange. There are a number of crypto exchanges like BitpayCoinbaseBitstampKrakeneToro, and Binance (to name a few) that will allow you to sell your Bitcoin for fiat money. This fiat money would then cover costs associated with the real estate purchase like the down payment, closing costs, title insurance, etc.
  • Due diligence is necessary. Similar to an all-Bitcoin real estate transaction, in a Bitcoin to fiat transaction the seller will need legal representation to complete the due diligence of verifying the buyer through KYC, AML, SDN List, and PEP List checks. Again, this is to ensure the buyer’s Bitcoin was not acquired by illegal activities.
  • Tax implications. When a buyer sells their Bitcoin for fiat money, the buyer will have to pay any capital gains made on the sold Bitcoin.

The Advantages and Disadvantages to a Crypto Real Estate Transaction

While real estate transactions using Bitcoin or other cryptocurrency may seem like the wave of the future, it comes with its advantages and disadvantages. Below are some things to keep in mind when buying or selling real estate using cryptocurrency.


The advantages to a crypto real estate transaction are:

  • A major advantage to an all-Bitcoin transaction is how efficient the process can be. If you’re making a real estate transaction using Bitcoin, it could be as quick as 10 to 15 minutes for the transaction to take place versus a number of weeks or months through a traditional real estate transaction using fiat money.
  • In an all-Bitcoin transaction, there are fewer fees. Since there are fewer intermediaries or middlemen in an all-Bitcoin transaction there are significantly less fees than there are in a traditional real estate sale.
  • There is always the possibility that the price of Bitcoin will gain in value after the sale of property. The seller will then benefit from an increase in the value of the Bitcoin they gained from the real estate sale.


The disadvantages to a crypto real estate transaction are:

  • Bitcoin transactions are not reversible. In an all-Bitcoin real estate transaction, when the buyer transfers the Bitcoin payment from their digital wallet to the seller’s digital wallet, the buyer has to be absolutely certain they are transferring their Bitcoin to the correct digital wallet. Should the Bitcoin transfer to the wrong digital wallet by accident it is highly unlikely the buyer will get that Bitcoin back.
  • While you may be able to find a seller willing to take Bitcoin or other forms of cryptocurrency as a form of payment for real estate, you might not be so lucky when it comes to finding a title insurance and/or escrow company that feel comfortable with digital currency transactions.
  • There is an unlikelihood that any all-Bitcoin real estate transactions will qualify for a 1031 exchange. A 1031 exchange is an IRS regulation that allows the deferral of applied capital gains tax from the exchange of one investment property to another investment property. A 1031 exchange is only possible with like-kind property swaps and within a certain time period of the purchasing process. Intermediaries such as attorneys or banks that are holding Bitcoin in escrow may not know, are willing, or are qualified to handle this sort of transaction to meet the IRS code Section 1031 requirement.
  • If a buyer is in a situation where the seller is unwilling to accept Bitcoin as a form of payment but agrees to allowing the buyer to exchange their Bitcoin for fiat for payment on a fixed dollar amount, the buyer is at risk of losing value. Because Bitcoin fluctuates so much, the buyer takes a risk on value. The buyer could be purchasing a home for a great rate or taking a loss depending on how well Bitcoin is doing in the market. Meanwhile, the seller is in good standing as the seller has the agreed fix dollar amount and knows the fiat money value they will receive from the transaction.

Government Crypto Regulations

Although Bitcoin resides in a decentralized system, it is regulated by certain sectors of the U.S. government. The government agencies that have policies in place to regulate cryptocurrency are the Internal Revenue Service (IRS), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network(FinCen), and the U.S. Office of Foreign Assets Control (OFAC). As these regulations apply to crypto real estate sales, a major concern is that the cryptocurrency used to make the purchase was acquired legally. For example, the seller of any piece of real estate that is purchased with Bitcoin needs to know their customer (the buyer of the real estate) and ensure that the buyer’s crypto was not acquired by illegal activity or that the crypto is from a terrorist organization.

Crypto is regulated by the government agencies listed above in the following ways:


The IRS considers cryptocurrency personal property just like real estate. When you sell your crypto, you’ll pay short- or long-term capital gains taxes. When a seller receives crypto as a form of payment, those earnings also need to be reported to the IRS as income. In all-Bitcoin sales the buyer may also have to pay taxes on the transaction.


The CFTC protects financial markets from abusive exercises like fraud.


FinCen analyzes financial transactions to fight against money laundering. A seller needs to do their due diligence with Ant-Money Laundering (AML) checks on the buyer to ensure the crypto used to purchase real estate is not a form of money laundering.


OFAC views cryptocurrency as fiat money and in the case of its Specially Designated Nationals (SDN) List and Politically Exposed Persons (PEP) List, people and organizations on those lists are blocked from making any trade or transaction with U.S. citizens. When making a crypto real estate sale, the seller will need to make sure the buyer is not on the SDN or PEP lists. By using Know Your Customer (KYC) protocols, most sellers can stay in compliance with OFAC.

Additionally, each U.S. state has its own regulations on cryptocurrency that sellers and buyers should be aware of.

Why do I need legal guidance on a real estate transaction using crypto?

Selling and buying real estate with Bitcoin and other forms of cryptocurrency is in its infancy and is evolving. Real estate players like real estate agents, brokers, banks, attorneys, escrow companies, and title companies are learning to adapt to these new digital transactions. If you are seeking to conduct a Bitcoin or cryptocurrency real estate transaction, you will need legal guidance on a number of aspects of the process from an attorney who is well-versed in real estate, cryptocurrency, and taxation. Lawyers with such qualifications can assist in the following areas of a real estate transaction using cryptocurrency:

  • 1031 exchange guidance
  • Closing services
  • Contractual agreements
  • Escrow services
  • Government and state cryptocurrency regulations
  • KYC and AML checks
  • SDN List and PEP List checks
  • Tax planning and implications
  • Title services guidance
  • Transactions with non-U.S. resident sellers and buyers

What is the future of real estate involving crypto?

As Bitcoin and cryptocurrency real estate transactions gain popularity, we’ll see a number of changes in the real estate industry that will adjust to this new form of payment. Some of the changes include:

  • There will be an increase in real estate brokers who specialize in transactions involving Bitcoin and other forms of cryptocurrency.
  • Real estate transactions will be structured differently.
  • Real estate transactions will be more efficient. A transaction will process in as little as ten minutes.
  • Crypto platforms will (and currently are) allowing lending. Some crypto investors are leveraging their crypto on certain platforms to get a loan for real estate purchases. With few verifications, low rates, minimal fees, and short- and long-term month loans, individuals are receiving loans, and buying and flipping homes.
  • Escrow could be eliminated in the future. Should real estate transactions using cryptocurrency gain popularity within the crypto world then we could see a future with the use of Ethereum and its built-in smart contracts for mortgage payments (which Ethereum has already begun working on). A bit of background, a smart contract is an encrypted piece of code that lives on the Ethereum blockchain that will make an automated transaction of a token between buyer and seller with encoded preset rules. A smart contract would basically eliminate the middleman. For example, when you enter into escrow on a house, an escrow service is the third party that acts as the monetary holding entity that pays your insurance, taxes, etc. month over month. Now, if you were to pay for your home using crypto then the smart contract would directly pay the insurance or taxes instead on an escrow account, thus, eliminating that escrow service between those transactions all together.


Why is Bitcoin the most popular crypto for real estate transactions?
Bitcoin is the most popular crypto used for real estate transactions for the simple fact that it is the most well-known cryptocurrency. The majority of crypto holders are invested in Bitcoin versus other coins. Bitcoin also has the strongest impact on the crypto market, currently. Investors want to own Bitcoin now as it continues to grow in value.
Can I use my crypto to get a home loan?

Purchasing real estate with crypto is brand new territory and so is classifying crypto as an eligible asset when underwriting loans. As of July 2021, your best bet is to sell your crypto for fiat in order to receive a loan. However, there are challenges with this as lenders want to see the paper trail of how you made that money. This can be difficult for lenders to follow as the blockchain that cryptocurrencies are built on is designed as an open-source digital ledger but the cryptocurrency on it is anonymous. Lenders need to ensure that any gains made from a cryptocurrency sale is legitimate in order to underwrite a loan. Lenders who are not knowledgeable or skilled in the crypto space will most likely not underwrite a loan, however, there are a few lenders out there who will. Some of the more popular lenders have policies on this:

  • Fannie Mae – Fannie Mae requires proceeds from digital currencies to be converted into the U.S. Dollar in order to be considered an eligible asset. Fannie Mae requires that the cryptocurrency was owned by the person seeking a loan, which would involve the KYC and AML checks.
  • Freddie Mac – Freddie Mac does not consider cryptocurrency an eligible source of funds.
  • The VA – The VA does not have policies just yet on whether or not crypto is an eligible asset.

Glossary of Important Terms

Here are some important terms to learn when it comes to real estate transactions using cryptocurrency:

Escrow is contractual legal agreement that a third party holds money until a condition has been met as outline in the agreement. Once met, the money in escrow is paid out.
The title on property is the legal ownership of the property. If you own the title on the property, you have the right to sell the property and transfer the title on the property to a buyer.


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