Cryptocurrency holdings are moving beyond trading accounts and NFTs and into the mortgage market. A small but growing set of specialized lenders now allow borrowers to use Bitcoin and other crypto assets either as collateral for loans or as part of the asset verification process when buying a home. These products attempt to unlock illiquid crypto wealth for property purchases while trying to manage the unique risks posed by digital-asset price swings, custody, and tax treatment. For a recent example of a mainstream lender offering these kinds of products, see this report. https://candysdirt.com/2025/12/12/have-bitcoin-now-you-can-finance-a-home-with-cryptocurrency-mortgage-lender-milo/

How the products typically work

• Crypto-backed mortgages: Borrowers pledge crypto as collateral to obtain a USD mortgage or line of credit without selling their holdings. Lenders apply conservative loan-to-value (LTV) ratios to compensate for volatility and maintain the ability to liquidate collateral if margin requirements are breached.
• Crypto-aware underwriting: Instead of traditional deposit histories, lenders accept crypto exchange statements, wallet custody records, or tax filings to verify down payments and reserves. Some firms convert a crypto balance to a dollar-equivalent at origination and require proof of custody with a regulated custodian.
• Hybrid flows: Some products let borrowers use crypto proceeds for down payments (which may trigger capital-gains events) and then take a mortgage in fiat; others structure the loan so borrowers never sell their crypto, avoiding an immediate tax event—at the expense of collateral volatility.

Pricing, LTVs and operational mechanics
Underwriting reflects two primary risk drivers: price volatility and custody counterparty risk. Lenders mitigate these by:

• Reducing permitted LTVs relative to conventional mortgages (typical ranges reported by market participants vary but are materially lower than standard 80% conventional limits).
• Applying dynamic mark-to-market clauses and margin-call mechanisms tied to an agreed set of price feeds or oracles.
• Requiring custody with regulated, insured custodians and imposing transfer/liquidation rights in loan agreements to ensure enforceability.

Interest rates and fees tend to be a function of the borrower’s credit profile plus a premium for the operational and liquidation risk the lender assumes. Expect stricter reserve requirements and more frequent valuation reporting than a standard mortgage.

Custody, title and settlement frictions
Crypto integration requires more moving parts than a conventional mortgage:

• Custody: Lenders prefer custodians that provide provable, auditable custody records and can execute liquidations on short notice. The choice of custodian affects counterparty risk and therefore pricing.
• Title companies and insurers: Many title underwriters and closing agents remain cautious about funds originating from exchanges or self-custodied wallets. Additional documentation and escrow arrangements are often necessary.
• Settlement mechanics: Synchronizing crypto transfers and fiat closings introduces operational complexity. Some lenders build middleware to convert pledged crypto into fiat in stressed scenarios, while others maintain pre-approved liquidation workflows with custodians.

Tax, compliance and consumer protection
Using crypto to finance a home raises tax and regulatory considerations that materially alter borrower economics:

• Capital gains: Selling crypto for a down payment generates taxable events. Using crypto as collateral may avoid immediate gains but can still create taxable consequences in complex jurisdictions if collateral is liquidated.
• Anti–money-laundering and KYC: Lenders must verify sources of funds and comply with AML rules; robust provenance and transaction histories are required to clear compliance gates.
• Consumer risk: Margin calls and forced liquidations can result in sudden losses that affect repayment capacity—disclosures and stress testing must be explicit.

Market implications and who these products suit
These mortgage structures primarily appeal to high-net-worth and early crypto adopters who prefer to retain crypto exposure while buying property. They also serve borrowers seeking to avoid capital-gains realization at the time of purchase. From a market-structure perspective:

• They create an on-ramp for crypto wealth into real assets without selling, which can reduce short-term selling pressure on the asset markets.
• They concentrate counterparty and liquidity risk in a small ecosystem of custodians and specialist lenders, creating focal points for regulatory attention.
• If adoption scales, these loans could be packaged or securitized in novel ways, introducing digital-asset risk into broader credit markets.

Risks that lenders and borrowers must manage

• Volatility and liquidation risk: Sharp price moves can trigger margin events; borrowers need to understand cadence and thresholds of mark-to-market and liquidation.
• Legal