Better and Coinbase have partnered to launch the first conforming mortgage where borrowers can pledge Bitcoin or USDC as collateral instead of a traditional cash down payment. This means that turning digital assets into real‑estate collateral without forcing a taxable sale is now a possibility.
The product, which marks the first instance of a conforming mortgage structured around a digital asset pledge, is originated and serviced by Better and backed by Fannie Mae, carrying the same guarantee structure as standard conforming mortgages and enables interest rates lower than those typically associated with private token-backed lending products.
That framework gives regulators and investors comfort, while still letting crypto‑holding borrowers keep their stacks on‑chain.
Critically, under the product terms, market fluctuations in BTC value do not trigger margin calls or require additional collateral. Liquidation of collateral is only initiated in the event of a 60 day payment delinquency, consistent with conditions applied to standard conforming loans. Borrowers pledging USDC also retain access to staking rewards, which can be applied to offset mortgage payments.
As token-backed financing becomes more common many industries are set to change. Smith Hamilton is at the forefront in advising clients in these areas especially credit funds and lenders, sophisticated borrowers, product providers, issuers and token development firms.
-Freya Howard, Partner
