The Dubai property market remains divided over buying and selling transactions through crypto-assets. The debate heated up since Samana Developers announced that they would execute realty transactions by accepting Dogecoin as a payment option for its upcoming residential project in Jumeirah Village Circle.
This is the second such move after Kiklabb, a Dubai government-owned licencing solutions service, started accepting cryptocurrencies in February as a payment option for trade licences and visa fees.
Atif Rahman, director and partner of Danube Properties, said: “In contrast to the global attention cryptocurrency has drawn, I remain hugely sceptical as it is more of a commodity than a currency, which is bartered against any purchase where it might be accepted. There is absence of regulation and one carries a huge risk of devaluation led from fluctuation. It is difficult to understand how it can be incorporated into the real estate industry especially when you talk about off-plan properties. The law of the land requires funds to be routed via an escrow account which in my knowledge does not support crypto.”
“Over and above that, if I sold properties in exchange for crypto, I still need to change it to a mainstream currency for paying the contractors, suppliers or brokers. In case during the lag between the property transfer and conversion of crypto to local currency if the crypto dropped in value I would carry a huge risk of loss even to the extent of a project right off. The property development business remains exposed to construction cost inflation at all times, adding another uncertain variable through crypto can be quite fatal for a project.”
While the property sector debates on cryptocurrency, Dubai witnessed some path-breaking development during the first quarter. In March, a memorandum of understanding was signed by the Securities and Commodities Authority, which saw businesses dealing with crypto assets gain access to licences offered by the DMCC Crypto Centre; the Dubai Multi Commodities Centre (DMCC) will establish a regulatory framework for businesses offering, issuing, listing, and trading crypto assets. And recently, the Dubai Airport Free Zone Authority signed an agreement with the SCA to support the regulation, offering, issuance, listing and trading of crypto assets within the free zone.
Farooq Syed, CEO Springfield Properties, said: “I believe we should entertain cryptocurrency as a mainstream payment in the real estate market as it opens up a new segment of buyers for us. The risk will be borne by the seller of the property and if he or she is willing to take the risk of accepting payment in cryptocurrency then they should be allowed to. When buying properties directly from the developer, the risk would fall on the developers who wish to accept the crypto and would put Dubai’s dynamic real estate market on the radar of these overseas crypto billionaires.”
Arshad Khan, CEO of Arabian Bourse, said: “The significant growth of global cryptocurrency markets underlines the legitimacy of this asset class to function as a store of value and as a medium of exchange. Cryptocurrencies can be used as a mode of payment in the mainstream commercial environment; this is primarily due to higher transaction speed and shorter settlement cycle, which are the result of blockchain-based operations."
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