Crypto partnership enables bitcoin-backed property purchases in Cayman

Bitcoin and USDC owners can now use their digital asset holdings as collateral for property loans to purchase real estate in the Cayman Islands.

Ledn and Parallel, both licensed virtual asset service providers (VASPs) on island, have partnered to offer a financing solution for real estate investors.

The partnership combines crypto lender Ledn’s expertise in financial services with Parallel’s work in crypto-based property transactions.

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It will enable real estate purchasers to use bitcoin and USDC as collateral for crypto loans provided by Ledn, while Parallel facilitates the purchase from non-crypto property sellers, bridging the gap between crypto and traditional banking.

To take out a Ledn loan, crypto investors can initially use bitcoin as collateral. Similar to Ledn’s already existing loan products, clients would need to be able to start with a 50% loan-to-value ratio, at an annual interest rate of 12.9% APR.

While Ledn’s portion of the loan is completely fiat-free, using bitcoin or US dollar-backed stablecoins, Parallel is handling the conversion into fiat currency.

Since its first sale of a Cayman home using cryptocurrency in the summer of 2022, Parallel has facilitated several other crypto property purchases, ranging from US$1 million up to US$12 million. 

Ledn said in a press release the collaboration would particularly benefit crypto-native investors seeking access to Cayman’s residency-by-investment offering.

Under the government programme, local real estate investments of more than US$2.4 million qualify a buyer for permanent residency in the islands and, after a minimum of five years, open a potential pathway to British Overseas Territory and subsequently British citizenship.

Laura Birrell, CEO of Parallel said in a social media post, through this partnership, clients can use their crypto as collateral for Ledn loans, which loans can then be used to purchase real estate through Parallel.

“This partnership underscores the Cayman Islands’ dedication to nurturing responsible crypto growth while providing investors with a genuinely inventive route to fulfilling both their financial and lifestyle ambitions,” she added.

Before Parallel was granted a VASP licence in February 2022, the issue for crypto real estate purchases had always been the difficulty in verifying the source of funds and satisfying various local regulators, including the Cayman Islands Monetary Authority and the Department of Commerce and Investment as the anti-money laundering supervisor for realtors.

This left prospective buyers only with the option of converting their crypto and transferring fiat currency through the traditional banking system prior to the purchase leading to higher exchange fees and conversion costs.

Parallel is so far the only real estate cryptocurrency escrow provider offering a method to use bitcoin to buy and sell properties on island.

Outside of the novel financing and payment solution, the sale and conveyancing process, along with customer due diligence, in a property transaction remains unchanged.

Canadian firm Ledn, which offers a range of digital asset financial products and services, including Bitcoin-backed loans and digital asset savings accounts, received a Cayman VASP licence in May of this year.

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