Need Collateral to Get a Mortgage? Check Your Crypto Wallet 

As Dorothy Gale said in The Wizard of Oz, there’s no place like home. Today, thanks to the magic of crypto, she wouldn’t need enchanted slippers to get there.

On Thursday, crypto platform Coinbase and mortgage company Better Home and Finance introduced a product that will let homebuyers use the digital coin as collateral for a Fannie Mae-backed mortgage. It marks the first crypto-backed mortgage that Fannie, which is overseen by the Federal Housing Finance Agency, will accept. The move could potentially usher similar products into the mainstream at a time when young people are struggling to afford homes and increasingly interested in digital assets.  

“Token-backed mortgages are a major first step to unlocking homeownership for the younger generations that have struggled with barriers to saving for a traditional down payment,” Max Branzburg, head of consumer and business products at Coinbase, said in a statement.

Bitcoin and Ether and SOL, Oh My 

Turning to crypto isn’t necessarily new for generations that barely remember a world in which you couldn’t manage your money from your phone. Roughly 13% of Gen Z and millennials who recently bought a home sold crypto investments to do so, according to a survey published by online real estate brokerage Redfin last year. But thanks to Coinbase and Better Home’s new partnership, investors won’t actually have to sell their bitcoin and other tokens to buy a home, allowing them not only to avoid a potentially large tax bill but also to stay invested in the $2.4 trillion market. 

Fannie’s acceptance of crypto-backed mortgages is just the latest example of how a once-dismissed, niche corner of the financial markets is blazing a path into the norm: 

• Major players in the investment space are racing to get a piece of the crypto pie. In just the past few months, Fidelity Investments launched its first stablecoin and BlackRock expanded its Ethereum lineup. Meanwhile, the New York Stock Exchange (NYSE) is partnering with digital asset company Securitize to develop a tokenized securities trading platform. 
• “The digital asset trend has shifted from a focus solely on cryptocurrencies, like Bitcoin and Ethereum, to exploring the tokenization of all assets,” Amy Oldenburg, Morgan Stanley’s head of digital asset strategy, said in a recent post on the firm’s site.

More to Come: Crypto may seem inescapable, but we’ve likely just seen the start of its influence.  “Our industry is now exploring how blockchain technology can deliver value in all areas of our business,” Oldenburg added. “We are still in very early innings.”