Cryptocurrency: How It Could Affect You

(Published on - 2/9/2018 7:42:32 PM)

"Bitcoin" is a word most have probably heard but may not completely understand.
In simple terms, Bitcoin is a digital currency, no bills or coins to print, and no government or institution that controls it. Without a government or authority controlling it, the value of Bitcoin is open to interpretation.
How can this affect you? In January of 2018, some financial institutions made a change to how they view cryptocurrency assets, as they relate to mortgages. In December, Bitcoin, the most well-known cryptocurrency, had a tremendous run up. This left the world’s financial companies, regulators, and governments unsure of how to handle this new asset class. Until last month, banks disqualified cryptocurrency as an asset class. However, if customers sold their Bitcoin and converted it to US dollars, that was fine. What changed recently is the profits from the sale of Bitcoin have now been disqualified by some major banking institutions. The rationale is that illicit activity (money laundering) is a potential driver of the run up. And even though clients may have invested legitimate assets, the growth realized, may be on the heels of illicit activity. Therefore the profits are being excluded too. Cryptocurrencies and blockchain technology are a new issue for the world, including banks. They just aren’t sure how to deal with it yet.
If you plan to cash out a cryptocurrency investment for the purchase of your next home, be sure to check well ahead of time to determine whether the financial institution you are working with, disqualifies this asset class.