Last summer, Peter Lane Taylor first reported on a story about the Miami Beach penthouse that sold for a stunning $22.5 million worth of cryptocurrency. Taylor wrote:
At $4,440.50/SF, the deal broke every previous Miami Beach record for price per square foot. Yet it raised more eyebrows for what it didn’t do: close in American dollars.
This summer, says Taylor, Miami’s real estate market is still going strong. And it’s the focal point of a cryptocurrency boom — likely setting the stage for similar energy in Austin, New York City, Los Angeles and San Francisco.
Coastal Miami, Taylor notes, has shown them all that crypto-based real estate sales are “legit, legal, enforceable, efficient, and here to stay.”
Paving the Way
Last year was a big year for Miami’s crypto crowd. Property Markets Group (PMG) announced it would take cryptocurrency when the company’s E11EVEN Residences® debuted. The oceanfront property boasts staffed office suites, an exclusive fitness club, plus member-only beach and pool access. The website homepage features a helicopter landing pad. Fancy stuff.
PMG then decided on a similar policy for its Waldorf Astoria Residences. The building, connected with Hilton Hotels, has permits for construction as the first super-tall skyscraper in Miami. It’s slated to be finished in 2025. (With new climate-resilient codes going into effect in Miami, they engineers will likely be very busy between now and then.)
PMG is involved in deals for more than 75 condos at these two properties involving cryptocurrency deposits. The company claims more successful real estate closings with digital currency than any other property owner in the world. Taylor duly names PMG as “the first international developer to go all in on crypto.”
With their embrace of digital assets, are PMG’s promoters at the leading edge of the next wave of real estate? It seems so.
According to a new security token market report from Cointelegraph Research:
With investors looking for a more secure investment that utilizes emerging technology, the demand for blockchain-based investment opportunities backed by real-world assets is increasing.
Using the blockchain to create tokens for home properties, for example, is a fast-growing trend. Check out this image of the number of security tokens by industry. It’s a striking illustration of today’s blockchain-realty fusion.
Tokenizing property is just one aspect of blockchain’s rise in the sector. We follow this rise in our ongoing reporting on how blockchain is changing real estate.
Who Is FTX?
Cipriani Residences Miami, by Mast Capital, is another group that’s accepting crypto assets. It relies on the FTX platform. FTX can exchange bitcoin or other digital assets into dollars in a split second.
Headquartered in the Bahamas, FTX has earned credibility in up-and-coming Miami business circles. The American Airlines Arena by Biscayne Bay, so named from 1999 to 2021, is now named the FTX Arena — home of the NBA team Miami Heat. In March 2021, when FTX negotiated the $135 million deal, the company agreed that Miami-Dade County would reserve the sponsorship funds to address local poverty and gun violence.
FTX is on a mission in Miami — to attract international buyers who want to place some of their wealth in luxury real estate. These buyers can purchase condos without the deals getting tangled in the transborder fees and red tape that accompany international money wiring.
Solving the Volatility Problem
Now, we might ask, what protects the parties from sudden changes in a cryptocurrency’s value?
Crypto buyers send deposits straight from their wallet apps to U.S. escrow accounts. As they do, the value of their cryptocurrency is locked in, so it won’t fluctuate before closing. These transfers comply with U.S. security regulations, namely anti-money laundering (AML) and know your customer (KYC) provisions.
This is how cryptocurrency becomes a viable option in real estate. And it’s how a few intrepid developers are anticipating billions of dollars in earnings over the next five years.
Peter Lane Taylor for ForbesLife, via Forbes.com: Crypto Just Became Real Estate’s Hottest New Thing. Here’s What That Means For Buyers, Sellers, And Developers (May 7, 2022).
Cointelegraph Research: Blockchain investments are disrupting the real estate industry: Report (Jun. 21, 2022).
Photo credit: Elvis Vasquez, via Pexels.