Fannie to accept Crypto as down

[Tawfik Ahdab]

“
For decades, the path to homeownership has required Americans to sell assets, liquidate investments, or withdraw retirement savings to cover a cash down payment; often triggering capital gains taxes or early withdrawal penalties.

Market reports suggest 52 MM American adults or 20% of American adults have owned digital assets. Token-backed mortgages empower Americans who own digital assets but lack sufficient downpayment funds, or prefer to keep downpayment funds liquid, to secure a home loan by pledging their tokenized assets as collateral. The tokenized asset pledge acts as a substitute for the cash downpayment, meaning customers can utilize their digital assets, without selling them, to satisfy downpayment requirements for a mortgage.”

https://www.businesswire.com/news/home/20260326569749/en/Better-and-Coinbase-Launch-the-First-Token-Backed-Conforming-Mortgage

What could possibly go wrong when one of the most leveraged corporations in America - and in receivership, mind you - decides to take crypto as collateral for real estate transactions?

The residential real estate cycle is on its downward trajectory at the same time that crypto has recently shown how speculative and risky an “asset” it is.

 

[TerryRohrer]

Q: Are failing companies more or less likely to take great risks?

AI A:
Failing or underperforming companies are generally more likely to take great risks. According to behavioral theory, companies falling short of their goals tend to engage in risky, "sink-or-swim" behavior to turn performance around, while successful companies often become risk-averse, focusing on maintaining stability.

Key Aspects of Risk-Taking in Failing Firms:

• Performance Gap: Managers of distressed companies often feel they have little to lose, making "double-or-nothing" bets more appealing to reverse decline.
• Strategic Repositioning: Failing firms might pursue aggressive mergers, acquisitions, or product pivots that are high-risk but promise high returns.
• The "Gambler’s Ruin" Scenario: Often, this increased risk-taking is a reaction to severe cash flow problems and debt.

However, this is not always a successful strategy:

• Risky Behavior vs. Risk Taking: Failing firms often confuse calculated risk-taking (necessary for growth) with reckless gambling, which can accelerate failure.
• The "Hidden" Cost: These companies might fail to calculate the true value of the risk, operating on shaky financial metrics and lack of planning.

 

[Bobby Bucks]

I read an article about this earlier today in crypto news sites, it’s big news in crypto world.

 

[glenn walker]

Their not holding the crypto it's converted to cash upon receipt a no risk transaction.

 

[Tawfik Ahdab]

Are you sure, Glenn?

To repeat part of the quotation above:

“The tokenized asset pledge acts as a substitute for the cash downpayment, meaning customers can utilize their digital assets, without selling them, to satisfy downpayment requirements for a mortgage.”

“Without selling them”…

 

[glenn walker]

Are you sure, Glenn?

To repeat part of the quotation above:

“The tokenized asset pledge acts as a substitute for the cash downpayment, meaning customers can utilize their digital assets, without selling them, to satisfy downpayment requirements for a mortgage.”

“Without selling them”…

You have to read the fine print on details ...most just read the headline story not the guidelines. There's no downside risk to lender or GSEs.

 

[djd09]

fannie also accepted no doc loans...

 

[Tawfik Ahdab]

Would you care to share the fine print of which you speak? Because the fine print would have to be contrary to the gist of this article, however, superficial or misleading it might otherwise be.

 

[Digger88]

**No, the crypto is *not* converted to cash.** That's the whole point of this new product from Better and Coinbase (launched March 26, 2026).

Here's exactly how it works (straight from the press release and coverage):

- You **pledge** Bitcoin (BTC) or USDC directly from your Coinbase account as collateral.
- Coinbase Custody holds the crypto, and this pledge backs a **separate privately financed loan** that provides the *cash* for your down payment.
- Better then originates a **standard Fannie Mae conforming mortgage** on the home itself — exactly like any other conforming loan.

The GSE (Fannie Mae) sees **zero crypto exposure**. They are only guaranteeing/backing a normal, clean conforming mortgage with no volatility risk, no margin calls, and no special rules. The crypto stays in your account (or Coinbase's custody) the whole time — you don't sell it, you don't trigger taxes, and you keep any upside (or even earn rewards if you use USDC).

Key protections that eliminate downside for the GSE (and keep things conforming):
- No margin calls or top-ups if BTC price drops. Mortgage terms stay exactly the same.
- Liquidation of the crypto collateral can *only* happen after a 60-day mortgage delinquency (same as a normal foreclosure process).
- Market swings alone never trigger anything.

This is why it qualifies as the “first token-backed *conforming* mortgage” — the GSE side is untouched and risk-free for them. The crypto risk is fully isolated in the private down-payment loan layer.

**Bottom line:** Yes, there is **no downside to the GSE** (Fannie Mae) because crypto is never sold or directly tied to the mortgage they back. It's pledged, not converted. Borrowers get to use their digital assets without selling, and the mortgage rates/pricing are the same low conforming rates everyone else gets.

Early access is open now at better.com/crypto-backed-mortgages if you're interested. This is live (or rolling out in the next few months) for qualified borrowers.

 

[Bobby Bucks]

There have been multiple ways to borrow using crypto as collateral for years. Each lender has its own policy and rate due to the volatility of Bitcoin and other crypto currencies. The allure is you don’t have to sell and have a taxable gain. Several years ago I used a company called Nexo to borrow and was required to transfer a specific amount of Bitcoin to their exchange which they held as collateral until I paid off the balance. They’re located in Switzerland and Bulgaria and at the time the US government was making life difficult for them all while SBF & Celsius were scamming thousands of people with help from US politicians, go figure. There was no sale on my part. I borrowed the money to trade other crypto on their exchange. I compared rates borrowing against Bitcoin vs. a standard home equity line from a bank and currently it is better for me to use an equity line. The ones who may benefit are some of the guys who don’t own a home yet, but have a lot of Bitcoin or other crypto and want to avoid large tax if they sell the Bitcoin for a down payment. When I last checked they were willing to give me a loan for approximately 30% of my Bitcoin. The rates vary and will depend on one’s LTV. The companies LDN, Nexo, Unchained and Coinbase are the big ones. Some of the big banks will be getting into the game eventually.