United Wholesale Mortgage (UWM), one of the foremost mortgage lenders in the United States, has suspended its plans to accept cryptocurrency payments.
In a press release shared earlier this week, the Pontiac, Michigan-based mortgage lender explained that the risks associated with the acceptance of cryptocurrency far outweighed the benefits, and it would not be moving forward with the initiative for the time being.
Not So Feasible For Now
UWM had announced its plan to accept Bitcoin for payments back in August. The company explained at the time that its initiative would make it possible for U.S. homeowners to pay for their home loans in Bitcoin, marking it a first for the industry.
At the company’s second-quarter earnings call, chief executive Mat Ishbia said they were looking into the initiative’s feasibility and hoped to have something concrete by Q3. A company tweet even shared the possibility of adding payment options for Ether and other digital assets once the Bitcoin initiative sails through.
In this week’s press release, UWM explained that it accepted its first cryptocurrency payment in September and processed five more transactions this month. The pilot program focused on examining the speed, security, and ease of cryptocurrency payments. But, while the tests were successful, UWM said it would drop the idea for now.
“As we said last quarter, we were going to look into accepting cryptocurrency and test it to see if it’s a faster, easier and cheaper solution, and thanks to our innovative technology team members, the transactions were successful.”
“Due to the current combination of incremental costs and regulatory uncertainty in the crypto space, we’ve concluded we aren’t going to extend beyond a pilot at this time.”
Crypto for Investments; Not Payments
Speaking further to CNBC, Ishbia added that the problem wasn’t particularly with the cryptocurrencies themselves. He disclosed that UWM couldn’t find a market. While borrowers thought it was “cool” to make mortgage payments in crypto, there wasn’t much of a push to drive the initiative forward.
While the demand might not be substantial for now, UWM stated that it is committed to monitoring cryptocurrency adoption in the U.S. market to see possible paths forward.
The development further underscores the increasing use of cryptocurrencies as an investment, but not for payments. Crypto adoption continues to rise in the United States, with Chainalysis suggesting in its 2020 Crypto Adoption Index that traders and institutions appear to be driving this adoption push. But digital assets don’t seem to have the same appeal when it comes to payments.
Nevertheless, some companies have continued to push for crypto payments. Last month, major cinema giant AMC Theaters rolled out crypto purchase options for its electronic gift cards. Company CEO Adam Aron announced that customers would buy these cards for up to $200 with cryptocurrencies. Purchases will be available through the AMC mobile app, website, and physical theaters.
AMC continues to progress with its plan to accept crypto payments for movie tickets by the end of the year. The market will see how well this project pays off.