Coinbase, in collaboration with Better Home & Finance, is allowing home buyers to use their crypto assets as collateral for down payments; this stands out as one of the most ambitious attempts to adapt digital assets to mainstream needs.

According to the companies’ announcement on Thursday, a potential homeowner could provide a loan collateral against Bitcoin or USDC in their Coinbase account to cover the down payment. The loan will be separate from the Fannie Mae-backed home mortgage.

This move will spare homebuyers from having to sell their crypto assets to finance their down payments; this transaction is typically done with cash and cash-equivalents.

Customers can hold onto their assets for a longer period, potentially benefit from more price increases, and defer their tax liabilities.

Additionally, it can also alleviate the long-standing criticism that the practical use of crypto assets is limited.

Kara Calvert, head of U.S. policy at Coinbase, told Reuters, “This product is designed to operate within the safeguards of the existing mortgage system, including how risks such as asset volatility are managed.”

However, this approach adds complexity and leverage to an already expensive purchase. In fact, buyers will be taking a gamble that maintaining exposure to cryptocurrencies justifies taking on a second loan, in addition to one of the largest financial commitments of their lives.

According to the National Association of Realtors, access to homeownership has narrowed in recent years, as the average age of first-time homebuyers has risen from 32 in 2000 to 40, due to high borrowing costs, elevated prices, and limited supply.

Mortgages will be provided and serviced by Better.

FROM FRINGE TO MAINSTREAM

The crypto-friendly Trump administration took various steps to ease regulatory barriers that have long restricted the spread of traditional financial products.

Last year, the White House instructed regulators to expand access to alternative investments, including cryptocurrencies, for retirement savers in 401(k) plans.

During the campaign process for the 2024 presidential election, Trump had promised to make the U.S. the “crypto capital” of the world.

Coinbase’s manager Calvert said, “We are actively engaging in a bipartisan dialog with Washington on cryptocurrency regulation,” and added that the company’s product would expand access to homeownership for Americans whose wealth is not in traditional accounts.

Coinbase said its crypto-backed mortgages function like traditional home loans with the same legal protections.

The company spokesperson said that once the loan is activated, the mortgage terms and interest rates will not be affected by Bitcoin’s price fluctuations.

The spokesperson also added that even if the value of the cryptocurrency shown as collateral decreases, a margin call will not be made as long as the owner does not miss their payments.