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Crypto is increasingly being used for real estate transactions

Ben Shaoul, Managing Partner of Magnum Real Estate Group, and BitPay SMO Bill Zielke join Yahoo Finance Live to discuss how cryptocurrencies are increasingly being used in real estate transactions.

Video Transcript


JARED BLIKRE: Welcome back. Bitcoin is being used to purchase coffee and cars too, and now commercial real estate. The first commercial real estate property in New York is being put on the market for Bitcoin, and Magnum Real Estate Group is selling three retail condos complete with a rented-out retail bottom floor in New York's Upper Side-- Upper East Side for $29 million. It'll only accept Bitcoin.

And here to tell us about the property market for Bitcoin real estate transactions are Ben Shaoul, managing partner of Magnum Real Estate Group, and Bill Zielke, excuse me, Zielke, CMO of BitPay, a crypto payments processing company, along with Yahoo Finance's Jennifer Schonberger. And Jennifer, I let-- I'll kick this off to you. I want you to ask the first question. This is really fascinating, and we can get the background story here.

JENNIFER SCHONBERGER: Thanks, Jared. Ben and Bill, welcome to Yahoo Finance. It's great to have you both on the program.

BILL ZIELKE: Thank you.

BEN SHAOUL: Thanks for having us.

JENNIFER SCHONBERGER: Ben, let me start with you. As we mentioned in the intro, this is your first commercial real estate property on the market for Bitcoin. It's located at 385 First Avenue. It is a luxury new construction residential building in Gramercy Park. Why are you only accepting Bitcoin here? What is the upshot to transacting in crypto?

BEN SHAOUL: The theory here for us-- and this is actually our second transaction. The first one was not a marketed transaction, but we transacted on the sister building to this property on 89th Street, also retail condo, where we were approached by a purchaser to buy with Bitcoin. What we realized is that there's a demand for real estate, and there's nothing being offered to the owners or the holders of cryptocurrency. So our idea is to offer something that's unique and try to pair the holders of the crypto with those who want to sell real estate.

JENNIFER SCHONBERGER: Bill, let me come to you. BitPay is processing this real estate transaction for Magnum-- of course, BitPay a crypto payments processor. What are you seeing in terms of transaction volume for real estate and crypto right now?

BILL ZIELKE: Yeah, thanks, Jennifer, for having us, and we're pleased to support Magnum Real Estate with this effort. You're right. We're a cryptocurrency transaction processor. On average, in any given month, we're processing about 150,000 total transactions per month and, on an annualized basis, about a billion in value.

One of the fastest growing segments is luxury goods, real estate among them, alongside of other purchases of cars and boats and gold and jewelry. But this-- luxury goods in particular is one of the fastest, more popular, representing almost a third of our sales in the month of October alone.

JARED BLIKRE: And Bill, let me just follow up with you there. Is this service-- do you think this is more geared towards people who have a lot of crypto wealth and they simply don't want to convert it into fiat and it's just simply easier to pay from their stock of Bitcoin as opposed to people who are legitimately just trying to spend Bitcoin the way they would their fiat cash? I'm not sure if this is part of a rising trend or maybe just something that is a little gimmicky and attracts attention.

BILL ZIELKE: Yeah. No, I appreciate the question. And certainly from our standpoint, we don't see it as a gimmick. We see living life on crypto as something that's happening at an ever-increasing rate with the amount of wallets that are now in the marketplace, over 100 million crypto wallets and growing really at a double-digit rate, and now the market cap of Bitcoin alone over a trillion.

Really, businesses stand a lot to gain from having access to those customers, just as has been mentioned, and finding new segments where buyers can unlock their discretionary purchase power. We often see when we have run-ups, like the one we've had in Bitcoin where we're making now a double top, that those holders of crypto-- again, a large number of them-- are experiencing discretionary spending power. And they want things like real estate, automobiles, jewelry, watches, to have purchasing power and to be able to use that currency.

For real estate in particular, using a digital asset-- especially if you have a buyer that's outside the United States-- really provides a very efficient method of payment, even more so over the traditional methods of payment like wire transfer or ACH. Often, if it's an international buyer, that purchase can happen at any point, 24 hours a day, not just business hours, can happen without the expensive-- or, in some cases, time-consuming-- wire transfer fees. So those are just some of the things that make paying with an asset like Bitcoin, or any digital asset, more efficient and more effective.

JENNIFER SCHONBERGER: Ben, let me come to you. As mentioned at the top of the interview, this is your first commercial property on the market for Bitcoin, and you have sold a property on the residential side for Bitcoin in the past. Do you plan to offer more properties moving forward for Bitcoin or crypto, and what is your expectation for demand and the outlook in the coming years for how much we could see transacting in real estate in crypto terms?

BEN SHAOUL: Sure. You know, to Bill's point, you know, part of this is a process in connecting owners of Bitcoin or any crypto to real estate. And by-- by introducing this to a whole new host of potential buyers or investors, you know, it's a process for us to educate them. And-- and with BitPay, we are able to show the seamless capabilities of transactions, right? And as you do more and more of these transactions, we're able to open up real estate investing to many, many different groups internationally.

So I see the runway for transactions with crypto only increasing exponentially. The fact that Bitcoin is at record highs, you know, obviously helps. But I think also investors are investors, and they've done very, very well owning Bitcoin, and now they're looking for cash-flowing assets. And this opportunity on 23rd Street and First Avenue gives someone the ability to transfer their Bitcoin into a cash-flowing asset where they can take some chips off the table or-- or, you know, then transact and sell the asset in a few years, as it's appreciated in value, to another buyer of crypto.

JARED BLIKRE: Yeah, interesting. Now everybody's trying to maximize their Bitcoin and crypto holdings. We thank you for your insights here, Ben Shaoul, managing partner of Magnum Real Estate Group, and Bill Zielke, CMO of BitPay-- along with Yahoo Finance's Jennifer Schonberger, of course.