Coinbase Partners with Fannie Mae to Make Crypto Assets a Real “Down Payment” for Home Buying

Original Compilation: AididiaoJP, Foresight News

Coinbase is partnering with Better Home & Finance to launch a Bitcoin-backed mortgage supported by Fannie Mae.

This collaboration marks a step towards integrating digital assets into the traditional housing finance system. The joint launch of a 加密貨幣-backed mortgage by Coinbase and Better Home & Finance, supported by Fannie Mae, opens a new pathway for the application of digital assets in housing finance.

This innovative product allows eligible borrowers to use Bitcoin or USDC as collateral for a down payment without having to sell their digital asset holdings. This approach can help avoid potential capital gains taxes while allowing borrowers to maintain market exposure to their assets.

The mortgage is designed as a compliant loan product, with standards and protective mechanisms consistent with traditional Fannie Mae-backed loans. Better handles loan origination and servicing, while Coinbase provides custody and related infrastructure support for the pledged Bitcoin and other crypto assets.

The product aims to address a long-standing barrier in the housing market: the upfront capital required for a down payment.

According to data from Better, approximately 41% of American households are unable to purchase a home due to insufficient liquid funds, despite holding other forms of wealth.

Better CEO Vishal Garg stated: “For decades, the path to homeownership for Americans has been limited to selling assets, liquidating investments, or tapping into retirement savings. This partnership will provide a new path for millions of Americans who hold digital assets.”

According to a press release from the companies, they estimate that about 52 million people in the U.S. have held digital assets, representing roughly 20% of the adult population.

The product allows borrowers to use crypto assets as collateral in place of cash, aiming to unlock their balance sheets to facilitate home purchases.

Bitcoin-Backed Mortgages

Unlike traditional crypto-backed loans, this product is designed to minimize volatility risk for borrowers. The loans do not have margin call or collateral top-up requirements. Even if the price of Bitcoin falls, borrowers are not required to add more collateral, and mere market fluctuations will not trigger asset liquidation.

The collateral is only at risk of being disposed of if a borrower becomes at least 60 days delinquent on their mortgage payments. This arrangement aligns with standard foreclosure processes in the traditional housing finance sector.

Mortgages using this crypto-backed structure are expected to have interest rates approximately 0.5 to 1.5 percentage points higher than standard 30-year mortgages, depending on the borrower. Coinbase believes this rate differential may be a worthwhile cost for borrowers wishing to avoid liquidating their assets.

Max Branzburg, Head of Consumer and Business Products at Coinbase, said: “Transforming digital wealth into home-buying power is a landmark development. 代幣-backed mortgages are our first step in creating a path to homeownership for the next generation.”

The product reflects a shift in wealth holding patterns, particularly among younger Americans. Data from Coinbase shows that 45% of young investors hold crypto assets, compared to only 18% among older demographics. This indicates that digital assets are increasingly becoming a primary store of value for the new generation.

Meanwhile, housing affordability continues to deteriorate. Home price increases have outpaced income growth, leaving many potential buyers in an “asset-rich, cash-poor” predicament. Token-backed mortgages attempt to bridge this gap by treating crypto assets as usable collateral rather than speculative investments.

Better has previously explored alternative collateral models. In 2023, the company allowed some Amazon employees to use their company stock as collateral for down payments. Company executives stated that including Bitcoin and crypto assets would significantly expand loan demand. Garg estimated that if the company had launched such a product earlier, it might have avoided up to $40 billion in lost loan origination.

The product structure also introduces new features unique to digital assets. Borrowers pledging USDC can continue to earn yield on their holdings, which can be used to offset part of the mortgage cost. Furthermore, Coinbase’s custody model allows users to pledge only a specific portion of their portfolio without locking up their entire assets.

The two companies stated that they plan to gradually expand the types of eligible collateral in the future, potentially including tokenized stocks, fixed-income products, and real estate assets.

Although crypto-backed mortgages have existed in niche wealth management channels before, Fannie Mae’s involvement signals a move towards broader adoption of such products. As a government-sponsored enterprise, Fannie Mae sets standards for a significant portion of the U.S. mortgage market.

By combining Bitcoin collateral with a compliant loan structure, the partnership between Coinbase and Better positions digital assets as a component of mainstream financial infrastructure, rather than a separate, parallel system.

Coinbase described the product as “as American as apple pie,” stating it is an evolution of housing finance, not a departure from tradition.

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