UK mortgage lenders refuse to accept bitcoin-originated cash deposits, citing money-laundering and inability to trace the source of the money as primary concerns, FT reports.
UK mortgage lenders and brokers are turning their backs on bitcoin and other cryptocurrency investors who want to sink their profits into properties.
Broker Mark Stallard from House and Holiday Home Mortgages said one investor used £40,000 of his bitcoin profits to open a deposit, but was denied a loan, as he was unable to prove where the funds had come from.
According to Stallard, UK mortgage lenders and brokers are reluctant to accept cryptocurrency-originated cash deposits out of fear of breaching anti money-laundering regulations.
“The first mortgage lender I rang asked me what a cryptocurrency was.”
“I rang two other lenders and they said they would not touch it,” Stallard said.
“When I mentioned where the money had come from there was massive reluctance to help or understand the problem. I do not believe the mortgage providers in general are ready for this issue and research tells me that a lot more people will be knocking on our doors with funds made or raised in this fashion,” Stallard added.
Max Wilde, an investor who made a six-figure sum from cryptocurrency trading, said it was “ludicrous” that his deposit might be denied a mortgage loan.
“There seems to be a silent decision made by the banking sector that cryptocurriences are dodgy or illegal.”
“Cryptocurrency has become the cash grab of our generation. There are a whole group of over 50s who don’t understand what cryptocurrency is and went from laughing at it to being worried by it and assume that in some way it’s dodgy or illegitimate,” Wilde told FT.
Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, told the Financial Times: “The money-laundering aspect of cryptocurrency is the most complex issue here because it’s hard to prove where the initial investment came from.”
According to Ray Boulger from mortgage broker John Charcol, investors who want to use their bitcoin-originated cash for a deposit should wait for at least six months before applying for a mortgage loan.
“In practice, if you use money from your bank account for a deposit, lenders will typically ask to see three of six months’ bank statements. So, if you’ve had money in your account since then, the chances are it won’t be a problem,” Boulger explained.
No regulation re the use of bitcoin-originated cash deposits in the UK
There is currently no regulation preventing mortgage loan applicants from using sterling pound proceeds from bitcoin or other cryptocurrency transactions as a deposit, The Building Societies Association said.
While several UK mortgage lenders said they would not accept bitcoin-originated cash deposits, others such as Coventry Building Society, Skipton and the Yorkshire Building Society are open to it. Banks including Santander, Nationwide and Aldermore said they had no policy on the matter.
UK mortgage lenders refuse to accept bitcoin-originated cash deposits – Image source: ALAMY