In Dubai property market, buyers switch to Stablecoins amidst Bitcoin price drops

By cashing out, these property owners are ensuring that the value of their holdings are not held hostage by the volatility Bitcoin and other cryptos are facing. This is where Stablecoins serve a purpose.

The relatively stability offered up by Stablecoins – that’s what is behind this switch from Bitcoin to pay off property deals

– Firas Al Msaddi of fam Properties

The typical Stablecoins getting used are the USDT and USDC – “they are being preferred because of their fixed value against the dollar,” said Al Msaddi. Unlike the Bitcoin and others of its ilk, Stablecoin prices are always linked to a fiat currency such as the dollar, exchange-traded commodities such as gold, or even a cryptocurrency.

Currently, there are more developers and landlords willing to accept payments through crypto, while the regulatory framework that will streamline such transactions are also on the way. Until that happens, all deals done exclusively using crypto must be settled through OTC exchanges and in cash.

Until it came crashing down to its current $25,000 plus levels, Bitcoin was the preferred crypto medium when it came to buying property here. It made sense at the time with Bitcoin values comfortably above $50,000 and then heading all the way to $68,000 in November last. There were entire property deals signed and sealed using crypto, primarily Bitcoin. Since then, the environment for Bitcoin and all other cryptos have got decidedly sticky on the price front.

“It will not be easy for Bitcoin with further interest rate hikes happening and investors worldwide wind down or cut their holdings in higher-risk cryptos,” said a property consultant.

In the UAE, the laws that will be the bedrock for the transition to a digital –driven economy are well underway, and this applies to crypto transactions too. “The UAE Central Bank has issued regulations regarding ‘Stored Value Facilities’ which include crypto currencies, as well as regulations for retail payments that take into account their use of crypto and digital assets,” said Samir Kanaan, Managing Partner at Kanaan Advocates and Legal Consultants.

“The Government of Dubai recently launched the Virtual Assets Regulatory Authority (VARA) at the Dubai World Trade Centre Free Zone to regulate virtual assets in the emirate. There are also initiatives by the various free zones such as the DIFC, ADGM and DMCC to provide the legal infrastructure and license the exchange of virtual assets and currencies in their respective free zones.

“We have seen certain businesses adopt their systems to allow payments by means of cryptocurrencies. Nonetheless, the adopters are relatively few when compared to the overall size of the market. A big reason why, is because the technology remains foreign to many, and the legal framework is still in its infancy.”

there are many companies which are being established here in the UAE to make it easier to exchange these crypto assets into official currencies quickly

– Samir Kanaan of Kanaan Advocates and Legal Consultants