Jamestown Plans Cryptocurrency Rent Payments

Real estate investment and management firm Jamestown is warming to cryptocurrencies. Well, kind of.

The company said that it is going to accept rent payments in the U.S., and eventually in Europe, in cryptocurrency. The transactions will happen through BitPay, a provider of cryptocurrency payment services. “Jamestown will accept rent payment in a range of cryptocurrencies that initially include Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Wrapped Bitcoin (WBTC), Dogecoin (DOGE), Litecoin (LTC), and five USD-pegged stablecoins (GUSD, USDC, USDP, DAI, and BUSD),” a press release noted. 

“Notable assets in the program include Ponce City Market in Atlanta, Ballston Exchange in Arlington, and Levi’s Plaza in San Francisco” and make up about 26 million square feet in space, the release continued. Jamestown will also give retail tenants the option of paying in cryptocurrency. It is also considering a program in which the company’s employees could opt to receive part of their pay in crypto.

That sounds like a virtually all-in statement, except for a curious clarification: “Jamestown will not receive or hold cryptocurrencies.” BitPay will accept the crypto payments and presumably turn over old-fashioned U.S. dollars to Jamestown. There is a solid accounting reason why Jamestown might want to skip holding crypto itself.

Even though the word “currency” is embedded in the term, cryptocurrencies are not any form of currency. They’re currently considered an intangible asset, which means some difficult accounting and reporting issues. 

When acquired, a company working under standard US GAAP accounting records cryptocurrency at its cost or value at receipt. But intangible assets are subject to review for impairment, including if their value on trading markets drops. At that point, the company has to write down the value. But if the value rises, you can’t increase it on the books. These are assets that, as far as reporting goes, can only go down in value, until the company disposes of them, in which case there’s now a capital gain. This is not what an investment fund is likely to want on its books.

Then there are expected developments in the cryptocurrency regulatory firmament. The Biden administration, SEC, and IRS are all considering new regulation, according to Accounting Today.

Finally, none of this may have a significant impact. According to a Pew Research study last fall, 16% of Americans say they have either invested in, traded, or used cryptocurrency. The numbers vary significantly by age and gender, with, as an example, 43% of men from 18 to 29 having done so.

A separate survey from last year, sponsored by Finder.com and conducted by Pureprofile, said that 23.16% of Americans owned a cryptocurrency, but that the median amount was equivalent to $191, and three-quarters of respondents had less than $1,003.

If that study is accurate, most people with cryptocurrency couldn’t afford even one month’s rent, let alone ongoing payments. Those who are rolling in crypto would seem more likely to keep holding it in anticipation of increases in value over time. 

While the Jamestown move is interesting, it may be more so in terms of marketing and positioning than actual financial usefulness.