THE WORD

Q. Do you think crypto-backed mortgages are viable?

With plans announced for Australia’s “first Bitcoin-backed home loan”, brokers have unpacked their thoughts on the viability of crypto-backed mortgages. This month, we ask…

Regulation needs to catch up
Chris Dodson
Mortgages Plus

Regulation needs to catch up

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.

But 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.

The fact is that you want to make sure that everyone sleeps well at night and no one gets into financial difficulty… 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.

Could work as a niche offering
David Vizza
Vita Finance

Could work as a niche offering

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. The main advantage is flexibility – it allows borrowers to retain their crypto holdings and potentially benefit from price appreciation, rather than being forced to sell to access equity. It could also open up borrowing opportunities for asset-rich, cash-poor individuals.

On the downside, 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.

For the vast majority of clients, particularly owner-occupiers or conservative investors, I’d still be steering them toward more traditional options with proven track records.

Education and clear contractual terms will be critical
Arnab Baral
Cinch Loans

Education and clear contractual terms will be critical

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.

But right now, most traditional lenders won’t recognise crypto as part of the borrowers’ 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.

Education and clear contractual terms will also 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.

If some do it, others may follow
Phil Rice
EZ Finance

If some do it, others may follow

In my view, banks see cryptocurrency as a threat to their dominance in the “money” space, so they may be hesitant to give any oxygen in any form to cryptocurrency. Additionally, I would view cryptocurrency similar in nature (from an investment perspective) to shares, as both can be volatile and can be converted into cash when redeemed. Shares are normally seen as an asset – and on the above basis – so too could crypto. The fact as to whether crypto is accepted as an asset for mortgage lending will not (in my view) have any major impact in the Australian market.

Currently, banks would see crypto on an application and probably take it as compensating factor, but not rely upon it as a physical asset (which could be seen the same for shares, as that “asset” could lose substantial value overnight).

But trends change and so too will the perception of crypto. If some banks view crypto as an asset, others will follow, creating a wider acceptance.

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News wrap August 2025