Billionaire Rick Caruso’s eponymous real estate company is jumping into the world of cryptocurrency and announcing on Wednesday that it will accept bitcoin as a rental payment in its residential and retail properties.
The private company said it has also invested some of its corporate cash in bitcoin and has partnered with Gemini, the cryptocurrency exchange and custodian led by CEO Tyler Winklevoss.
“We believe cryptocurrency is here to stay. We believe bitcoin is a right investment for us,” Caruso said on Wednesday in an interview on CNBC’s “Power Lunch.” “We have allocated a percentage of what would normally go to the capital markets to bitcoin.”
The moves of the Los Angeles-based company of Caruso represent the latest institutional adoption of bitcoin, which is seen as one of the factors driving the price of the world’s largest cryptocurrency soaring in recent months. According to Coinbase, Bitcoin traded just under $ 56,000 a coin on Wednesday, down from around $ 11,000 each in early October.
Tesla bought bitcoin with cash on its balance sheet earlier this year, and the Elon Musk-led company later began accepting it as payment for its electric vehicles. Jack Dorsey’s Square has also bought bitcoin for its corporate coffers.
There has also been movement of Wall Street companies. Morgan Stanley was the first major US bank to announce it would provide access to bitcoin funds for its wealth management clients, CNBC reported last month. The private asset management group at Goldman Sachs is also expected to soon offer its clients investment vehicles for bitcoin and other digital assets.
The Grove Mall in Los Angeles, California
Robyn Beck | AFP | Getty Images
Caruso’s properties include outdoor shopping centers The Grove in Los Angeles and The Americana at Brand in Glendale, California. The Americana also has luxury apartments.
As consumers eventually resume activities they interrupted during the Covid pandemic, Caruso told CNBC the health crisis will lead to some fundamental behavioral changes. “The companies that win their loyalty will be the companies that anticipate those changes and meet the consumer where they are, and that’s what Gemini helps us do,” he said.
“Cryptocurrency will be part of every 21st century shopping and real estate experience,” said Winklevoss, who appeared on “Power Lunch” alongside Caruso. Winklevoss and his twin brother, Cameron, are high-profile early crypto investors and have an optimistic long-term view of bitcoin.
Caruso provided an example he could see related to cryptocurrency and the company’s consumer rewards.
“Our loyalty program, what I have in mind when working with Gemini and the Winklevosses, is that you earn a coin. You earn a cryptocurrency,” said Caruso. “You can use that cryptocurrency on the blockchain and then spend at our properties. Check at our resort. If you live with us, pay your rent. We create this whole ecosystem.”
Some critics of bitcoin have questioned its current price, as well as its usefulness as a transaction tool. Given the Internal Revenue Service’s classification, there are also tax implications of using bitcoin to make purchases.
Caruso said his company’s entry into crypto is part of a long-term bet. “It’s not about the next year or five years,” he said. “We look forward to the next decade.”