The product lets borrowers use BTC as collateral without selling, avoiding triggering taxable events but still accessing home financing.
Bitcoin critic Peter Schiff has warned that a new mortgage product backed by crypto collateral could expose lenders to higher default risks.
His comments came as Better and Coinbase rolled out a plan allowing borrowers to pledge Bitcoin instead of selling it for a home deposit.
Bitcoin-Backed Mortgages Spark Debate
On March 26, Better and Coinbase announced a partnership to launch mortgages backed by digital tokens and tied to Fannie Mae standards. According to a press release, the product will allow borrowers to use their Bitcoin or USDC holdings as collateral for a down payment without having to liquidate them or triggering taxes.
According to Better, which describes itself as the first AI-native platform for mortgages and home equity financing, the offering will target millions of Americans who hold crypto but are struggling to save cash deposits. The company also pointed out that borrowers will not face margin calls if BTC drops, and collateral would only be liquidated if payment delinquency went past 60 days.
However, in his usual style, Schiff pushed back, arguing that the product’s structure will move risk to lenders.
“Allowing homebuyers to pledge Bitcoin as a down payment on mortgage is a horrible idea, as it substantially increases the risk for lenders,” he wrote on X. “If Bitcoin crashes, the down payment vanishes.”
The gold bug also added that lenders cannot sell the collateral unless the borrower defaults, later calling the model a “scam to keep people from selling their Bitcoin to buy houses.”
Volatility and Adoption Shaping the Broader Outlook
Better’s offering has arrived at a time when the largest cryptocurrency is showing renewed volatility. It lost the $70,000 level yesterday, falling toward $69,000 as it felt the effects of broader market weakness that also saw Ethereum dip below $2,100.
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At the time of writing, Bitcoin had gone below $69,000, shedding about 2% in the last 24 hours and nearly 3% over 7 days. However, the 30-day chart shone green, with BTC up nearly 6% in that period, even though the uptick did little to move it any closer to its October 2025 all-time high as it remains more than 45% below that level.
Some market observers have a different view of the current downturn, with analysts like Michaël van de Poppe noting that short-term holders were in capitulation, which is a situation often associated with longer-term accumulation phases as weak hands leave the market.
The mortgage product now sits at the intersection of these trends, with companies like Coinbase arguing on one side that digital assets can be used without liquidation, therefore giving younger investors holding crypto access to housing, while on the other side, critics like Schiff suggesting that tying home financing to such volatile assets will introduce risks that traditional mortgage structures were not meant to handle.
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