Launches First Bitcoin-Secured Residential Mortgage in Australia (via Block Earner)
In a groundbreaking move, Block Earner, an innovative Australian fintech company, has introduced Bitcoin-backed home loans, allowing eligible borrowers to utilise their Bitcoin holdings as collateral for deposit financing, without the need to sell their cryptocurrency. This innovative product caters to crypto investors seeking to enter the housing market while retaining exposure to Bitcoin’s market performance.
The loan structure works by leveraging the value of the borrower's Bitcoin to back the home loan. This approach addresses the dilemma many crypto investors face between holding onto their assets and accessing liquidity for property investment.
Block Earner's loans are interest-only for up to four years, and borrowers can make repayments in either cash or crypto. The loan is capped at a 60% loan-to-value ratio to manage Bitcoin's volatility, and a 30-day buffer is in place to help protect against price swings and reduce the risk of forced liquidations. Borrowers can exit early without incurring a penalty, and the loans cover up to 50% of a property's value and are secured against the borrower's Bitcoin.
Regulatory considerations have been significant in the introduction of Bitcoin-backed home loans. Block Earner has fought with regulators for over two years to launch this product, indicating the complexity and scrutiny involved. In broader contexts, regulators and financial institutions in countries like the US are beginning to explore how digital assets like cryptocurrencies should be treated in mortgage applications. For example, recent US legislation proposals would require mortgage lenders to include crypto holdings in credit evaluations, reflecting a growing acceptance of crypto assets as part of financial eligibility assessments.
Block Earner has already logged over AUD$110 million (US$72.4 million) in early borrower interest during its soft launch, despite no formal lender partnerships yet in place. The crypto is held in custody with Fireblocks, a digital asset security platform. If the price of Bitcoin drops sharply, borrowers are given a 30-day notice to fix the loan-to-value ratio by making fiat repayments, repaying collateral, or adding more Bitcoin. In the 30-day period, either the customer or Block Earner sells partial Bitcoin to correct the loan-to-value ratio.
Block Earner argues that long-term holders of Bitcoin and gold have greater purchasing power, even as property prices rise in fiat terms. The average Australian home price, when measured in Bitcoin, has fallen from 627 BTC in 2016 to just 4.3 BTC in 2024, according to Block Earner. This shift, according to Block Earner, is part of a trend where digital assets are no longer siloed from the real economy.
In conclusion, Block Earner’s home loan represents an “inevitable” progression for integrating digital assets into mainstream property finance. This product reflects a significant shift in how lenders consider digital assets in affordability assessments, and regulatory challenges have been significant but are gradually being addressed. As more countries explore the potential for crypto to be counted toward mortgage eligibility, the future of Bitcoin-backed home loans looks promising.
- Block Earner's innovative product, Bitcoin-backed home loans, allows crypto investors to utilize their digital currency holdings as collateral for deposit financing, retaining exposure to Bitcoin’s market performance.
- The value of the borrower's Bitcoin serves as the basis for the loan structure, offering a solution to the liquidity versus asset retention dilemma faced by many crypto investors.
- Interest-only repayments on these loans last up to four years, and borrowers can choose to make repayments in either cash or cryptocurrency.
- The loan-to-value ratio is capped at 60%, and a 30-day buffer is in place to protect against Bitcoin's volatility and reduce the risk of forced liquidations.
- Regulatory considerations have been crucial in the introduction of Bitcoin-backed home loans, with Block Earner working with regulators for over two years to launch this product.
- US regulators and financial institutions are considering how digital assets like cryptocurrencies should be treated in mortgage applications, with recent legislation proposals requiring mortgage lenders to include crypto holdings in credit evaluations.
- Block Earner sees this product as a significant step towards integrating digital assets into mainstream property finance, reflecting a trend where digital assets are no longer isolated from the real economy.
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