NEW YORK — Mortgage lender Better and cryptocurrency exchange Coinbase have originated what the companies say is the first Fannie Mae-backed mortgage that uses cryptocurrency holdings as collateral.
The first borrowers, Joe and Amy of Ann Arbor, Mich., used bitcoin to secure a conventional 30-year fixed-rate mortgage without selling their digital assets, according to the companies.
Joe told Yahoo Finance that before learning about the Better-Coinbase product, he and his wife had considered either selling bitcoin and paying capital gains taxes or using a margin loan backed by their cryptocurrency holdings.
“The two alternatives me and my wife were looking at was either selling and paying long-term cap gains or using a margin loan type structure,” Joe told Yahoo Finance. He said margin loans carried variable interest rates and the risk of margin calls.
How Program Works
Under the program, borrowers pledge cryptocurrency as collateral, with the assets held in a custodial account rather than liquidated. The structure allows borrowers to avoid triggering capital gains taxes while maintaining exposure to potential appreciation in the value of their digital assets.
According to Yahoo Finance, Better Founder and CEO Vishal Garg described crypto-backed conventional mortgages as the beginning of a broader shift toward lending secured by tokenized assets.
“Americans used to keep all their money in banks,” Garg told Yahoo Finance. He argued that younger consumers increasingly hold wealth in stocks, bonds and digital assets rather than traditional savings accounts.
Garg said the concept could eventually expand beyond cryptocurrencies and stablecoins to include tokenized versions of publicly traded stocks and other assets.
Fully Digital Process
Roy Zhang, director of product at Coinbase, told Yahoo Finance that the mortgage application process is fully digital. Eligible Coinbase customers apply through Better and, once approved, can transfer bitcoin into a custodial wallet with a single click to support the mortgage transaction.
A key aspect of the program is that the mortgages are backed by Fannie Mae as conventional conforming loans, according to Yahoo Finance. Garg said that distinction makes the product part of the mainstream mortgage market rather than a niche financial offering.
“The fact that it complies with the underwriting requirements of a Fannie Mae conforming mortgage means that Fannie Mae … purchased $1.2 trillion of mortgages from the market” last year, Garg told Yahoo Finance.
The companies plan a broader rollout of the product later this summer. Until then, interested borrowers can join a waitlist through Better’s website.
What Data Show
According to Yahoo Finance, data from the waitlist shows:
- 76% of respondents are Coinbase users
- 37% hold $500,000 or more in cryptocurrency assets
- 63% expect to purchase a home within the next six months.
Based on that demand, Better estimates potential loan volume of approximately $250 million, Yahoo Finance reported.
Currently, borrowers can pledge bitcoin and the stablecoin USDC as collateral. In addition, Coinbase One members are eligible for a rebate equal to 1% of the mortgage amount, up to $10,000. The rebate, paid by Better, can be used toward closing costs or to reduce the borrower’s interest rate, according to Yahoo Finance.
One Response
Ocala Community Credit Union already has a partnership with Supreme Lending that handles just this service. Closings on Mortgages using Digital Assets.