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Two different ways to structure the funding

Practical starting point: discuss a dollar-funded escrow structure first. This is a planning recommendation, not a law requiring every purchase to use the same method. Do not assume a seller or escrow company accepts Bitcoin, Ether, or a stablecoin simply because you hold it.

California rules still apply

A crypto-funded purchase remains a real estate transaction. California’s general requirement for a signed written real estate sale agreement still matters. Payment technology does not replace title review, the required conveyance documents, disclosures, or the closing process.

California regulates independent escrow agents, with specified exemptions and other regulators for some providers. Confirm the closing provider’s authority and accepted funding methods. A real estate license alone should not be treated as authorization to operate a crypto exchange or custody service.

California’s Digital Financial Assets Law regulates covered crypto business activity with or on behalf of California residents. DFPI states that, from July 1, 2026, covered providers must meet applicable licensing requirements, qualify under the timely application provisions, or be exempt. Check a provider’s actual status and permitted services; an application is not the same as an issued license. This framework concerns covered business activities, not a blanket promise that every token or purchase is approved.

Sources: 1 · 2 · 3 · 4

A practical purchase checklist

1. Agree on the funding plan early

   Tell the closing team that funds originate from digital assets before submitting an offer. Ask what documents and payment route they accept, and allow time for review.

2. Build a clear record of the funds

   Prepare identification, exchange statements, acquisition records, relevant wallet transaction history, conversion receipts, and bank statements connecting the proceeds to you. The exact requirements depend on the provider and transaction. Never share seed phrases or private keys.

3. Document the contract terms

   For any direct-crypto proposal, have counsel address the asset and blockchain network, dollar valuation and pricing time, fees, custody, confirmations, price changes, shortfalls, deadlines, cancellation, and refunds. These are drafting considerations, not a standard California crypto contract.

4. Allow for conversion and settlement risk

   Plan for market movements, platform withdrawal limits, compliance reviews, banking hours, and transaction delays. A stablecoin can carry issuer, redemption, network, and price risks. Maintain enough accepted funds for the deposit, closing costs, and agreed obligations.

5. Complete the property checks and close

   Keep inspections, insurance review, title work, and contractual contingencies on schedule. Independently verify payment instructions using a trusted contact number. A blockchain transfer alone is not a substitute for completing the real estate conveyance and recording process.

Sources: 3 · 4

Selling or spending crypto can create a tax event

The IRS treats digital assets as property for U.S. tax purposes. Selling them for dollars or exchanging them for a home can produce a reportable gain or loss. Paying directly in crypto does not automatically avoid tax. Keep records of acquisition cost, dates, units, dollar value at disposition, and fees.

For amounts subject to California income tax, California does not provide a lower capital-gains rate. Actual liability depends on factors including tax residency, sourcing, holding period, and applicable rules or treaties. An overseas buyer’s crypto gain is not automatically taxable by California just because the home is in Los Angeles. Get advice for your circumstances before conversion or payment.

The property transaction also has ordinary closing and ownership costs. Where relevant, federal FIRPTA and California real estate withholding requirements still need to be addressed; crypto payment does not remove them. Ask the tax adviser and escrow officer how withholding will be funded and remitted.

Sources: 5 · 6 · 10 · 11

Using crypto proceeds for a mortgage purchase

Obtain approval from your actual lender before relying on digital assets. Under Fannie Mae’s cited Selling Guide, converted proceeds may be used for a down payment, closing costs, and reserves when the conversion is documented, the dollars are held at a U.S.- or state-regulated financial institution, and the funds are verified before closing. The lender must document that relevant deposits originated from the borrower’s crypto account. That guide does not permit virtual currency itself as the earnest-money deposit.

This is a loan-program rule, not a universal California law. Other programs and lender requirements can differ. Do not assume unconverted holdings or a crypto-backed loan qualify; disclose the proposed funding and any borrowing to the lender.

Sources: 8

Sanctions and reporting are not bypassed

OFAC obligations apply to digital currency as well as ordinary currency. The parties, beneficial owners, providers, and transaction route may need screening. Crypto cannot lawfully be used to evade sanctions or conceal prohibited dealings. International buyers should have both U.S. and relevant home-country requirements reviewed.

FinCEN currently states that its Residential Real Estate Rule was vacated by a March 19, 2026 court order and that an appeal is pending. While that order remains in force, reports under that rule are not required. Other applicable tax, bank, sanctions, and reporting obligations remain relevant. The closing team should recheck requirements for the actual closing date.

Sources: 7 · 9

Start with the property and your goals

Alex Rad Group can help you explore Los Angeles properties and negotiate the real estate purchase. Any crypto funding proposal needs review by the relevant independent professionals and approval of the funding and closing arrangements. This page is informational and is not an offer to accept, exchange, transmit, or hold digital assets.

Ali Alex Rad · California DRE #02098149 · Beverly & Company

Official sources & loan-program guidance

1. California DFPI: Digital Financial Assets Law
2. DFPI: Digital Financial Assets Law FAQs
3. DFPI: California escrow regulation
4. California Civil Code §1624: written agreements
5. IRS: digital assets and tax reporting
6. California FTB: capital gains and losses
7. OFAC FAQ 560: sanctions apply to digital currency
8. Fannie Mae Selling Guide: virtual currency
9. FinCEN: current residential reporting status
10. IRS: FIRPTA withholding
11. California FTB: real estate withholding