ISCOVER
With plans announced for Australia’s “first Bitcoin-backed home loan”, brokers have unpacked their thoughts on the viability of crypto-backed mortgages.
While cryptocurrency has boomed in Australia over the past decade (with around a quarter of Australians owning some cryptocurrency, according to crypto exchange Swyftx), lenders have typically shied away from accepting it as a security.
However, with the currency gaining momentum, a new lending product could be set to launch in Australia that will allow crypto holders to use bitcoin (which reportedly accounts for more than half of the Australians’ crypto holdings) as security for deposit finance to enter the property market while “maintaining their Bitcoin market exposure”.
A new crypto-backed offering is set to be launched by digital asset fintech Block Earner, with a cash loan issued against bitcoin, covering up to 50 per cent of the property value.
How would it work?
According to the fintech, Block Earner loans would typically be used to fund the deposit component. A traditional mortgage lender would then finance the remainder of the property price through a standard home loan.
While formal lending partnerships are in late-stage discussion, boutique lender Mortgage Direct (of which Block Earner is a credit representative) is already on board.
Customers must borrow a minimum of $25,000, meaning roughly 0.25 BTC is required as security based on today’s rates.
The bitcoin-backed deposit loan could be borrowed interest-only for up to four years, with principal repayable in crypto, cash, or via refinancing at the end of the loan.
Block Earner said borrowers can exit the bitcoin loan at any time without penalty. The borrowers’ bitcoin would be held in institutional-grade custody via Fireblocks.
Full rollout plans for the product are expected later in 2025.
What’s the risk?
When asked for comment, Block Earner told The Adviser that the product aims to let crypto-holding borrowers keep their bitcoin and use it as security to borrow for a home deposit or to top up an existing deposit.
That could potentially improve their loan-to-value ratio (LVR), reducing or removing lenders mortgage insurance (LMI).
However, Block Earner noted: “Borrowers maintain full exposure to Bitcoin’s price.”
That means if the bitcoin value increases, borrowers may choose to pay it down faster using the appreciated crypto.
Or if the price falls, Block Earner reserves the right to call back a portion of the loan after 30 days.
When asked to clarify what protections are in place for customers, Block Earner said: “Borrowers are protected from sharp market volatility through a combination of over-collateralisation, real-time alerts, and a 30-day cure period.”
If the value of bitcoin drops and the LVR exceeds safe levels, borrowers are notified and given 30 days to restore the LVR by adding more collateral or repaying part of the loan. If no action is taken, Block Earner may sell bitcoin to bring the LVR back to a healthy range.
Price volatility only affects the bitcoin-backed deposit loan – the borrower’s home is never at risk with bitcoin price, Block Earner said.
What do brokers think?
Speaking to The Adviser, Chris Dodson, principal broker at Mortgages Plus, said he felt that although cryptocurrencies were maturing as an asset class, more regulation was needed before they could be fully integrated into the mortgage space.
“Innovation within the market is something that I think we can all welcome and look forward to, as long as all the due diligence has been done upon it,” he said.
However, he cautioned that price swings were a concern: “It’s hard to ignore the volatility… is that something that we should be pulling across to an asset class like housing? [I] don’t have the answer to that… I think it’s going to come at some stage. I just don’t know when, and the right amount of due diligence needs to be applied.”
Similarly, Vita Finance director and finance broker David Vizza flagged that crypto came with risks.
“The volatility of cryptocurrencies, lack of regulatory clarity, and potential security concerns around asset custody all pose real risks. There’s also uncertainty around how lenders manage margin calls if the value of the collateral drops sharply.“
To overcome problems associated with volatility, Arnab Baral, CEO and managing director of mortgage brokerage Cinch Loans, told The Adviser that there needs to be “serious risk controls” applied to crypto.
“Education and clear contractual terms will be critical. Personally, I’d feel more comfortable with a hybrid structure – for example, a mix of Bitcoin and stablecoins to back the deposit component. That would soften the volatility, offer more predictable asset backing, and give lenders more confidence,” Baral said.
He added that there were benefits of incorporating crypto into the home loan market.
“It aligns with how many younger Australians are building wealth today – not just through cash savings and super, but through crypto. Structurally, if it helps them avoid LMI by boosting deposit size, that’s a genuine financial benefit,” Baral said.
However, Baral warned: “Right now, most traditional lenders won’t recognise crypto as part of the borrower’s asset base, so adoption is still going to be niche.
“Regulatory clarity is still a work in progress. Until there’s more guidance, especially around credit risk and AML/CTF compliance, large-scale adoption will be slow.”
Looking ahead, Vizza said mainstream adoption was unlikely in the near term.
“At this stage, I see crypto-backed mortgages as a niche offering that may suit a very specific segment of the market, typically younger, tech-savvy investors with a high risk tolerance. It’s an exciting idea from an innovation perspective, but not something I’d expect to see adopted by major banks or mainstream lenders in the short term.“
Dodson said he believed there was still “a long way to go” before he would be open to recommending crypto-backed lending products linked to mortgages.
“The fact is that you want to make sure that everyone sleeps well at night, and no one gets [into] financial difficulty,” he said.
“I find that’s kind of my role as a steward, especially in residential loans. Because you look after the first home buyers [so] that they don’t extend themselves too much.
“Is crypto going to have a seat at the table? Moving forward, I think it’s pretty plausible, but it needs to be regulated in the right way… people need to be very careful that they don’t overexpose themselves.”
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