American homebuyers are less interested in pledging cryptocurrencies like bitcoin.
United Wholesale Mortgage, which went public in January due to a Special Purpose Acquisition Company (SPAC) merger, began operating the industry’s first cryptocurrency payments in August. However, CEO Matt Ishbia told CNBC that after the trial, he decided it was not worth it.
“We have concluded that due to the current combination of incremental costs in the cryptospace and regulatory uncertainty, we do not intend to proceed from pilots at this time,” Ishbia said.
A Michigan-based mortgage company has seen three different cryptocurrencies, Bitcoin, Ethereum and Dogecoin, and several different borrowers work on the process. UWM accepted its first crypto mortgage payment in September and was successful in accepting five more payments in October.
But in the end, there was no demand. Ishbia told CNBC that the borrower “loved it” and “said it was cool”, but the choice to trade in cryptocurrencies “wasn’t a driver.”
“At the end of the day, there was not enough demand to push the limit,” he said.
This is the latest proof that many cryptocurrency users regard it as an investment rather than a substitute for money. Cryptocurrency prices soared last year, yet they are rarely used to buy or sell physical goods. Instead, most investors stick to the idea of ”HODL” (with dear life in mind). There, you buy and hold virtual coins in the hope that they will increase in value. Last year it was a good bet – bitcoin is worth five times more than it was a year ago, while ether is worth ten times more.
Treasury Secretary Janet Yellen and SEC Chair Gary Gensler said they have no plans to ban cryptocurrency transactions. However, the proposed infrastructure bill includes new reporting requirements for cryptocurrency “brokers,” and major players in the sector, such as Coinbase and Andreessen Horowitz, are asking regulators to clarify. Growth.
UWM, the second largest mortgage lender in the country after the Rocket Company-owned Detroit-based lender Quicken, operates only through wholesale channels.
The company itself does not hold cryptocurrencies on its balance sheet. UWM converts the tokens received at the time of the transaction into fiat currency.
For the six homeowners participating in the experiment, some may face tax charges on payments made in cryptocurrencies.
Since the IRS classifies digital currencies such as bitcoin as assets, mortgage payments in cryptocurrencies are considered taxable.
There is always a difference between the amount paid for a cost-based cryptocurrency and the market price at the time of using it. The difference could cause you income capital gains taxes in addition to other taxes, such as sales tax.
“One thing that many people are unaware of is that buying coffee and all kinds of consumer goods using cryptocurrencies results in capital gains,” said Shehan Chandrasek, a certified accountant and director. Sekera says. Tax Strategy from CoinTracker.io, a digital currency tax software company that helps customers track cryptography on virtual wallet addresses and manage their associated tax obligations.
If a sufficient number of borrowers eventually become interested, UWM may wind up the project in the future.
Ishbia cites CNBC as a cipher “It’s becoming more mainstream and can be turned on at any time. Now we know how to do that.”