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

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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

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