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07 Feb 2022 Industry News

How crypto is transforming the real estate market

I suspect I am not the only one who is highly suspicious of crypto and is keeping my hard earned savings far away from Bitcoin, Dogecoin and NFTs.

One sector where even I can see crypto creating a lot of interesting opportunities, however, is real estate. I found this blog post by expert Justin Shee a very user-friendly summary of how crypto is starting to transform how people invest and finance property:

What does it say?

A key point is that crypto can allow property investments to be fractionalised and traded in a similar way to shares. This increases the number of potential purchasers and reduce frictions to buying and selling real estate. 

For example, using crypto you or I could go on to an exchange and trade tokens giving us a share in an underlying property. This would require minimal time, effort or the need for brokers etc. to be involved.  

Sounds great, so what’s the problem?

While not touched on in the blog post, I can see that one potential major issue with all of this is how crypto ends up being regulated.

The Government announced last month that they were going to bring the advertising of crypto currencies into line with other financial advertising (perhaps in reaction to the slightly absurd levels of crypto advertising on the tube recently). I suspect this will be part of a trend of crypto becoming increasingly regulated in a similar way to other investments. Given the inevitable frictions this will create, such regulation could put a dampener on things. 

Even if regulation does come, however, crypto’s ability to fractionalise ownership of real estate should change the real estate market for the better.   

Charlie Hewlett is an Associate in the Corporate team at Boodle Hatfield and a member of the firm’s specialist Entrepreneurs Group