Milo Launches First U.S. Crypto Mortgage

[ph1l]

you send $1M of btc to their wallet
...
It's not a downpayment and there's no crypto sale.

In the U.S., I think it is a crypto sale because the IRS treats crypto as property.
https://www.forbes.com/sites/robertwood/2021/08/02/three-tax-free-crypto-transfers/?sh=40a1bcdfb3f7

The tax paradox started when the IRS ruled that cryptocurrency is property in Notice 2014-21.

https://www.irs.gov/pub/irs-drop/n-14-21.pdf

Q-1: How is virtual currency treated for federal tax purposes? A-1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.

That doesn't mean the idea won't work, but that ruling makes it a little more complicated for both sides.

 

[johnarb]

In the U.S., I think it is a crypto sale because the IRS treats crypto as property.
https://www.forbes.com/sites/robertwood/2021/08/02/three-tax-free-crypto-transfers/?sh=40a1bcdfb3f7

https://www.irs.gov/pub/irs-drop/n-14-21.pdf


That doesn't mean the idea won't work, but that ruling makes it a little more complicated for both sides.

Bitcoin is property. You're using it as collateral to get a loan. Think of a pawnshop

BlockFi loan

1. You send your btc property to BlockFi as collateral
2. You sign the loan docs promissory note
3. Scratch loan company wires the money to your bank account nbd
4. You pay Scratch a monthly payment from your bank account $
5. You can renew the loan after a year or you can pay it off anytime
6. If you pay off the loan, BlockFi will move the btc/cryptos to their BIA BlockFi Interest Account
7. You start earning interest until you decide to withdraw your digital asset property back to your local wallet

At no time did you sell your cryptos or you bought stock in exchange for cryptos

I'm not a tax expert so you can consult your tax accountant, but just make sure you do not change the temrs I listed above

 

[ph1l]

Bitcoin is property. You're using it as collateral to get a loan. Think of a pawnshop

BlockFi loan

1. You send your btc property to BlockFi as collateral
2. You sign the loan docs promissory note
3. Scratch loan company wires the money to your bank account nbd
4. You pay Scratch a monthly payment from your bank account $
5. You can renew the loan after a year or you can pay it off anytime
6. If you pay off the loan, BlockFi will move the btc/cryptos to their BIA BlockFi Interest Account
7. You start earning interest until you decide to withdraw your digital asset property back to your local wallet

At no time did you sell your cryptos or you bought stock in exchange for cryptos

I'm not a tax expert so you can consult your tax accountant, but just make sure you do not change the temrs I listed above

That does make sense to me, but maybe not to the IRS.
https://www.forbes.com/sites/shehanchandrasekera/2020/07/21/are-cryptocurrency-loans-taxable

Crypto Loans
Technically speaking, crypto loans fail to meet the fungibility and return of the exact same collateral standards which shield loans from taxation as mentioned above.

First and foremost, cryptocurrencies are treated as “property” per IRS 2014-21 and most property is not fungible unlike the US dollar. Every unit of cryptocurrency is different from each other. Moreover, at the loan settlement the borrower is not getting back the same exact cryptocurrency he/she deposited at initiation. These two factors could convert generally tax neutral loan transactions into taxable sale transactions in the crypto world.

 

[johnarb]

That does make sense to me, but maybe not to the IRS.
https://www.forbes.com/sites/shehanchandrasekera/2020/07/21/are-cryptocurrency-loans-taxable

I get the argument and it's a good one, but the whole industry exists and IRS would have shut them down or released a statement if it wanted to

BlockFi, Celsius Network and even Fidelity are in this business in the US and it's big business

That article is from Forbes and is an opinion piece


Here's a thought exercise, if I send 1 bitcoin to Coinbase and held it there for 1 month and withdraw 1 btc back to my wallet, that article would claim I did not get my original property back, which is technically correct


anyway, I already paid my loan last year and already got my bitcoins back, I will be paying a lot of taxes because I sold cryptos to fiat last year

one thing that is interesting is that the loan is not from BlockFi but from a finance company

I would make a guess that Milo will not be the mortgage lender but some bank or another financial entity

 

[maxinger]

people are getting creative.

soon there will be millions of crypto derivatives.

 

[Pekelo]

I would never call a top on something

That is you. If a completely unrelated industry is using a blockchain as a mascot that is a clear sign of over saturation....

 

[johnarb]

https://www.figure.com/

https://twitter.com/x/status/1506649819305152527