Just hours after declaring its cryptocurrency payments pilot a success, United Wholesale Mortgage (UWM) decided to scrap the trial-run program it launched in August.
Mat Ishbia, UWM CEO, told CNBC that the country’s second-biggest mortgage company ultimately decided to scrap crypto acceptance because of “incremental costs and regulatory uncertainty.”
For the pilot, UWM accepted bitcoin, ether, and dogecoin, and successfully processed six payments across September and October. It was the first company in the mortgage sector to launch a crypto payments program.
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“There was not enough demand at the end of the day to really push the envelope too hard,” Ishbia told CNBC.
Although people indicated support for crypto and “said it was cool,” it wasn’t a decision-making factor, Ishbia added.
Now that the program was launched, Ishbia told CNBC that the company can “turn it on any day” if it makes sense and crypto payments are “more mainstream.”
UWM is a wholesale lender that works with independent mortgage brokers who connect clients to home loans. The company doesn’t hold crypto on its balance sheet, and the six mortgage payments received were converted to fiat currency at the time of the transaction.
The IRS views cryptocurrencies as assets, which makes mortgage payments in crypto a taxable event. The homeowners that made crypto mortgage payments to UWM could owe taxes on the transaction because there is always a difference in the amount paid for a cryptocurrency and the market value when it’s spent.
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Shehan Chandrasekera, a CPA and head of tax strategy at CoinTracker.io, told CNBC that the IRS aspect is something many don’t understand.
“The one thing that a lot of people don’t realize is that whenever you spend cryptocurrencies to buy a cup of coffee or any type of consumer item, that triggers a capital gains event,” said Chandrasekera.
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