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A client enquiring whether they can fund their house purchase with cryptocurrency will ring instant alarm bells for most conveyancers. And rightly so. The links between cryptocurrency and criminal activity, particularly money laundering, are well-known. Indeed, like many law firms, our anti-money laundering policy prevents us from acting in property purchases involving cryptocurrency.
But ID and money laundering checks aside, is buying a house with cryptocurrency even possible?
What is cryptocurrency?
Cryptocurrency is any form of currency that exists digitally, using cryptography to secure transactions. There is no central issuing or regulatory authority. Instead, exchanges use a decentralised system for recording transactions and issuing new units.
Undoubtedly, most of us think of Bitcoin when mentioning cryptocurrency. But current estimates put the number of cryptocurrencies at more than 23,000. And Bitcoin alone has around 24 million open addresses.
Can I buy a house with cryptocurrency?
There is no legal reason preventing you from buying a house with cryptocurrency. Indeed, if you trawl Rightmove regularly, you will occasionally encounter crypto-friendly sellers, but they remain rare. In practice, you will almost certainly encounter a raft of problems fuelled by uncertainty, risk and suspicion, particularly if you require a mortgage.
A few lenders will allow you to use cryptocurrency as a deposit for your house purchase. Yet even they won’t allow you to use the cryptocurrency itself. Instead, you must use the crypto profits after converting them into sterling.
Anti-money laundering rules mean lenders must be able to verify the source of your deposit funds to ensure you have accessed them legally. But cryptocurrency’s anonymous and unregulated nature means most lenders remain undecided on where they stand on accepting crypto profits. As a result, most will reject your mortgage application immediately.
Which lenders are crypto-friendly?
Inevitably, in the years ahead, the use of crypto profits and even cryptocurrency itself will become increasingly widespread in the property market. Interestingly, while the number of crypto-friendly lenders remains few, they include some big names, including Nationwide, Barclays and NatWest. And where the big names tread, others tend to follow.