- US officials are encouraging the use of crypto as home-loan collateral, after FHFA director Bill Pulte ordered Fannie Mae and Freddie Mac last year to prepare to count cryptocurrency as an asset for a mortgage. Mortgage lender Better and Coinbase then launched a product that lets buyers borrow against bitcoin.
- One buyer took out a $130,000 bitcoin-backed loan for his deposit, posting bitcoin worth 2.5 times that amount in Coinbase custody alongside a standard mortgage from Better. He pays 7.5% over 30 years on both loans, close to $5,000 a month.
- Better CEO Ziggy Jonsson says thousands have joined the waiting list, and 36% of them hold more than $500,000 in crypto. Better does not make margin calls if bitcoin falls, relying on overcollateralization and the property itself, while Miami-based Milo would ask for more collateral after a 65% drop.
- Consumer advocates are alarmed, with Corey Frayer of the Consumer Federation of America calling it “insane.” Big US banks have steered clear of crypto-backed loans, and bitcoin has fallen 25% over the past year to around $82,000.
What Happened?
The Financial Times profiled the growing US market for crypto-backed home loans, which remains niche but has gained official support. Under Better’s program, the buyer’s main mortgage qualifies for Fannie Mae but the crypto loan does not, and missing payments for 60 days counts as a default that allows his bitcoin to be seized. Better accepts only bitcoin for now but may add ether and solana. Pew Research found that 19% of US adults have invested in crypto at some point, up from 16% in 2021.
Why It Matters?
The product shows how policy is pulling crypto into the core of US housing finance, a market long built on income and cash savings. For Coinbase, holding loan collateral is a new use for its custody business, while Better gets a differentiated pitch to wealthy crypto holders. The risks are just as clear, since hacks, money laundering and price swings make crypto collateral harder to underwrite than stocks or cash. Sharon Cornelissen of the Consumer Federation of America warned that tying the product to taxpayer-backed Fannie Mae sends the wrong message to buyers.
What’s Next?
Watch whether Fannie Mae and Freddie Mac broaden how they treat crypto in mortgage underwriting, which would move these loans closer to the mainstream. Large banks’ continued absence leaves the field to fintech lenders and specialists such as Milo. A sharp bitcoin decline would be the first real stress test for products that rely on overcollateralization instead of margin calls. Regulators are also likely to scrutinize how lenders verify the source of borrowers’ crypto wealth.
Affected Tickers and Coins: BTC, COIN, BETR
Source: Financial Times
