Peter Schiff, a well-known critic of Bitcoin, believes that a new type of mortgage using cryptocurrency as collateral could increase the risk of borrowers failing to make payments, potentially causing problems for lenders.
The announcement followed Better and Coinbase’s new program that lets people use their Bitcoin as collateral for a home deposit, rather than having to sell it.
Bitcoin-Backed Mortgages Spark Debate
Better and Coinbase have teamed up to offer a new type of mortgage. Starting March 26th, borrowers will be able to use their Bitcoin or USDC as collateral for a down payment, without having to sell their cryptocurrency or pay taxes on it. The mortgages will follow the standards set by Fannie Mae.
As an analyst, I’m watching Better’s new offering closely. They’re aiming to help the millions of Americans who hold cryptocurrency but have trouble accumulating traditional cash for down payments. A key feature is that borrowers won’t be forced to sell their crypto if Bitcoin’s value drops, and their collateral will only be liquidated if they fall significantly behind on payments – specifically, after 60 days of delinquency.
But, staying true to his typical approach, Schiff countered that the product’s design would actually shift the risk onto lenders.
Using Bitcoin for a mortgage down payment is a bad idea because it significantly raises risks for lenders. A sudden drop in Bitcoin’s value could wipe out the entire down payment, according to a recent post on X.
The commenter, known as Goldbug, also pointed out that lenders can only sell the asset used as security if the borrower fails to repay the loan. They then strongly criticized the system, labeling it a scheme designed to discourage people from exchanging their Bitcoin for homes.
Volatility and Adoption Shaping the Broader Outlook
Better launched its product as Bitcoin’s price started fluctuating again. Yesterday, Bitcoin dropped below $70,000, falling to around $69,000, mirroring a general downturn in the market that also caused Ethereum to fall below $2,100.
As of today, Bitcoin’s price has dropped below $69,000, falling around 2% in the last day and almost 3% in the past week. Despite this recent dip, over the last month, Bitcoin has actually gained nearly 6%. However, it’s still a long way from its peak value in October 2025, remaining more than 45% below that high.
Some analysts believe the recent market drop isn’t necessarily a sign of further decline. Michaël van de Poppe, for example, points out that many short-term investors are selling, which often happens before a more sustained period of price increases as less confident investors exit the market.
This new mortgage product is caught between two opposing ideas. Companies like Coinbase believe digital assets, like cryptocurrency, can be used as collateral without needing to be sold, potentially helping younger, crypto-holding investors buy homes. However, critics like Schiff worry that linking home loans to these unpredictable assets could create risks that standard mortgages aren’t designed to manage.
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2026-03-27 11:03