Michael Jansta of Altisource: Cryptocurrency and Real Estate Finance

Michael Jansta is chief marketing officer at Altisource, an integrated service provider and marketplace for the real estate and mortgage industries. He has more than 15 years of real estate industry experience and is an expert at leveraging technology to facilitate online property auctions. He previously served as the general manager of Altisource subsidiary Hubzu, an online real estate marketing platform that has facilitated sales of more than 229,000 U.S. homes. He can be reached at Michael.Jansta@altisource.com.

MBA NEWSLINK: How is demand for cryptocurrency transactions in housing?

MICHAEL JANSTA, Altisource:  Demand is definitely growing as an increasing number of ordinary Americans have been investing in cryptocurrencies. According to Pew Research, the number of Americans who own or have traded cryptos went from 1% in 2015 to 16% this year. Among Millennials, who are driving today’s housing market, and Gen Z consumers, interest is even higher—about 43% of men between the ages of 18 and 29 have used or invested in digital currency.

More importantly, perhaps, is that a growing number of institutional investors are investing in cryptocurrency, including pension fund managers. In fact, while most the hype around cryptocurrency revolves around the viral news about individual investors, it’s institutional buyers and investors who are doing 90% of the cryptocurrency trading.

NEWSLINK: Why are institutional investors driving the crypto market versus individual investors?

JANSTA: Institutional investors are driving the crypto market for the same reason they hold such influence over the stock market—they have more to invest. As a group, institutional investors collectively manage somewhere around $100 trillion in assets. I also believe that larger institutions are increasingly looking beyond traditional investments like bonds to find better returns for their clients, and crypto has that potential. I read a recent study by Fidelity Digital Assets that found that 90% of institutional investors are interested in digital assets and about 70% plan to invest in cryptos in the future.

NEWSLINK: At what point should companies pay attention to cryptocurrency holders?

JANSTA: They should already be paying attention. Just look at Bitcoin, which has a market capitalization of $800 billion dollars and exceeded $1.2 trillion dollars back in November. Only a handful of publicly traded companies are worth more. You also have major financial and investment companies moving into digital currencies as well, including Goldman Sachs and JP Morgan Chase. As cryptocurrency investment continues to grow, there will naturally be more interest in converting cryptocurrency into real estate, especially as housing prices continue to rise.

NEWSLINK: Is there really that much money tied up in cryptocurrencies?

JANSTA: It seems hard to believe, but yes. Besides Bitcoin, there are hundreds of cryptocurrencies in circulation, dozens of which have more than $10 billion market cap. CoinGecko, an independent cryptocurrency data aggregator, recently estimated the entire size of the crypto market is about $3 trillion.

NEWSLINK: What are the incremental costs involved in selling cryptocurrency to buy real estate?

JANSTA: First you have to convert cryptocurrency into dollars, which typically involves a fee somewhere between 1 and 2%. So, if I sell $100,000 in Bitcoin in order to put a down payment on a home, I may have to pay a fee of around $1,500. But there is also a time cost associated with getting the proceeds into escrow. To convert crypto into dollars and transfer the funds into your bank account through an ACH transaction typically takes between three to five days. After that’s finished, you still need to initiate a wire transaction to deposit that money into escrow, which not only adds extra time but also invites the risk of fraud.

However, the platform we utilize, ForumPay (https://forumpay.com/), lets buyers convert their cryptocurrency into dollars and have it wired directly to the escrow account in one move, so they don’t have to go through their bank. This makes it incredibly easy for buyers to use cryptocurrency when buying a home—and it saves time and money.

NEWSLINK: Do you think it will become common to utilize crypto for all types of retail purchases?

JANSTA: Absolutely. In fact, while a relatively small number of merchants nationwide accept digital currency, you can already buy pretty much anything with bitcoin—electronics, jewelry, magazine subscriptions, even cars. We still have a way to go before all retailers accept Bitcoin and other cryptos. But between the growing interest in cryptocurrencies and the speed and security benefits of blockchain technology, I think it’s inevitable they will. As the popularity of cryptos grows, the mortgage industry needs to be prepared to work with consumers who prefer using digital currency.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)