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Bitcoin-backed property investment becomes new avenue for Cayman Islands residency | Online Money Moves

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The Cayman Islands has long been an idyllic beach getaway for tourists, but the archipelago could soon welcome Bitcoin (BTC) holders as new residents through BTC-backed loans used to invest in real estate.

Bitcoin banking firm Ledn, which is registered with the Cayman Islands Monetary Authority as a virtual assets service provider (VASP), is providing an avenue for Bitcoin holders to use their BTC as collateral for loans to invest in real estate on the islands.

This is just one avenue that prospective new residents of the islands could take to obtain citizenship, with investments over $2.4 million in real estate in the Cayman Islands qualifying a buyer for permanent residency.

Related: Noted tax haven Cayman Islands sees new bills to bring local crypto to FATF’s heel

Speaking directly to Cointelegraph, Ledn CEO Adam Reeds unpacked a new partnership with local real estate agency Parallel, which has also facilitated a number of cryptocurrency-based property sales in the Cayman Islands.

“Ledn will provide real estate buyers in the Caymans with crypto-backed loans, which Parallel will accept as a means to finance purchases. Parallel will only accept borrowed funds if they’ve been loaned by Ledn — it is an exclusive partnership in this sense.”

According to Reeds, Parallel handles conversion to fiat currency if either a buyer or seller prefers the option over a cryptocurrency payment. Meanwhile, Ledn’s portion of any transaction will be fiat-free, paid in either BTC or United States dollar-backed stablecoins.

“Parallel is a crypto-centric real estate broker in the Caymans, so users can now finance their purchase of real estate completely fiat-free.”

It is also possible for cryptocurrency holders to pay for a property with crypto in the Cayman Islands through Parallel. Reeds, however, highlighted a potential draw card in that investors can leverage their BTC holdings as collateral without selling a portion.

“Then if or when BTC goes up, your loan-to-value ratio goes down, so your house is appreciating, and so is the asset you’re borrowing against.”

Given that Parallel has previously sold real estate in cryptocurrency-facilitated transfers, Reeds added that both companies have seen demands for the service to finance significant property transactions.

The real estate firm sold a $10 million property in December 2022, which was paid for entirely in cryptocurrency. The company is also registered as a VASP with the Cayman Islands Monetary Authority, allowing it to facilitate cryptocurrency transactions. 

Both Ledn and Parallel must adhere to comprehensive compliance requirements as part of their registration with the local monetary authority.

The concept of attaining residency by investment involving cryptocurrencies is not entirely new. Vanuatu claims to be the first country to accept Bitcoin as a means of payment to obtain citizenship by investment. 

A number of other countries have emerged as cryptocurrency-friendly destinations to try and obtain citizenship. Portugal, Malta and El Salvador have all emerged as relatively crypto-friendly countries, but it is still not possible to directly invest in Bitcoin to obtain or be eligible for residency.

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